AT&T Jacking Up Early Termination Fees To $325

Illustration for article titled ATT Jacking Up Early Termination Fees To $325

Anyone signing an AT&T contract after June 1 is in for a nasty surprise if ever in the mood to break it: The early termination fee for smartphones is being raised from $175 to $325. Here's AT&T's ridiculous explanation:

The idea is, and we think that it's fair approach, that if you spend less on a device, your early termination fee should be less. If you spend more, your early termination fee should be more.

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So following that reasoning, AT&T is in fact "lowering the ETF on feature phones and messaging phones by $25 to $125 [$150]." This means that the individuals content with AT&T's feature phone and messaging phone offerings will be saving a whopping $25 while those of us who are with the company for one of its better devices—such as the iPhone—are stuck with an additional $150 punishment if we decide to flee.

Now, to make this increase of the smartphone ETF easier to swallow, AT&T is also increasing the amount by which your ETF is lowered as you near the end of the contract:

For customers who enter into new two-year service agreements in connection with the purchase of our more advanced, higher end devices, including netbooks and smartphones, the ETF will increase to $325, and be reduced by $10 for each month that you remain with us as a customer during the balance of your two-year service agreement. After that, the ETF will no longer apply.

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In the past, that reduction was $5 per month.

All in all, this increased ETF reduction rate and a slightly lower dumbphone ETF are supposed to comfort me when I renew my iPhone contract and agree to nearly double my old ETF. [AT&T via WSJ via Dallas News]

Update: Some clarification added regarding the gradual ETF reduction.

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DISCUSSION

AmphetamineCrown
AcetyleneCrown

Wow. A whole lot of misinformation out there. First, AT&T isn't doing anything that Verizon didn't do before. In fact, you might even argue that uber-high ETFs were ground first broached by T-Mobile, what with the $350 ETF for the Nexus One.

I personally like the observation made by Lemonade below that in the UK, if you terminate your contact, you owe what is left on your contract—monthly service charge x months remaining. Remember, in most contract situations, breaking your contract means you are liable for contract damages—just like what Lemonade is talking about in the UK. The ETF allows you to get out of your contract—and the damages you would ordinarily pay.

You don't like the ETF, don't get a phone from that carrier or buy an unlocked phone.