California judge rules early cell phone termination fees illegal....
07-31-2008, 03:22 PM
#1
California judge rules early cell phone termination fees illegal....
Hopefully this is a start to others!!!
http://tech.yahoo.com/blogs/null/99655
http://tech.yahoo.com/blogs/null/99655
In one of the most significant legal rulings in the tech industry this year, a Superior Court judge in California has ruled that the practice of charging consumers a fee for ending their cell phone contract early is illegal and violates state law.
The preliminary, tentative judgment orders Sprint Nextel to pay customers $18.2 million in reimbursements and, more importantly, orders Sprint to stop trying to collect another $54.7 million from California customers (some 2 million customers total) who have canceled their contracts but refused or failed to pay the termination fee.
While an appeal is inevitable, the ruling could have massive fallout throughout the industry. Without the threat of levying early termination fees, the cellular carriers lose the power that's enabled them to lock customers into contracts for multiple years at a time. And while those contracts can be heinously long, they also let the carriers offer cell phone hardware at reduced (subsidized) prices. AT&T's two-year contract is the only reason the iPhone 3G costs $199. If subsidies vanish, what happens to hardware lock-in? Could an era of expensive, but unlocked, hardware be just around the corner? It's highly probable.
Of course, the carriers aren't going to take this lying down. Early termination fees are seen as critical to business, so carriers are expected to look for ways to reclassify the fees (such as by calling them "rates," part of the arcane set of laws that covers the telecommunications industry). The industry is also pushing for the federal government to step in and claim oversight over the early termination fee issue, which would invalidate any state ruling. The FCC is generally more tolerant of such fees, though Chairman Kevin Martin has proposed a plan whereby the fees are decreased the closer you are to the end of your contract.
The FCC may also buy the argument that, since carriers are nationally based (and consumers can use their phones anywhere in the country), that a single policy should apply across the nation, rather than creating a patchwork of legislation that could lead to confusion and chaos caused by having 50 different policies.
Is the early termination fee dead? Not yet, but it's looking a little haggard.
The preliminary, tentative judgment orders Sprint Nextel to pay customers $18.2 million in reimbursements and, more importantly, orders Sprint to stop trying to collect another $54.7 million from California customers (some 2 million customers total) who have canceled their contracts but refused or failed to pay the termination fee.
While an appeal is inevitable, the ruling could have massive fallout throughout the industry. Without the threat of levying early termination fees, the cellular carriers lose the power that's enabled them to lock customers into contracts for multiple years at a time. And while those contracts can be heinously long, they also let the carriers offer cell phone hardware at reduced (subsidized) prices. AT&T's two-year contract is the only reason the iPhone 3G costs $199. If subsidies vanish, what happens to hardware lock-in? Could an era of expensive, but unlocked, hardware be just around the corner? It's highly probable.
Of course, the carriers aren't going to take this lying down. Early termination fees are seen as critical to business, so carriers are expected to look for ways to reclassify the fees (such as by calling them "rates," part of the arcane set of laws that covers the telecommunications industry). The industry is also pushing for the federal government to step in and claim oversight over the early termination fee issue, which would invalidate any state ruling. The FCC is generally more tolerant of such fees, though Chairman Kevin Martin has proposed a plan whereby the fees are decreased the closer you are to the end of your contract.
The FCC may also buy the argument that, since carriers are nationally based (and consumers can use their phones anywhere in the country), that a single policy should apply across the nation, rather than creating a patchwork of legislation that could lead to confusion and chaos caused by having 50 different policies.
Is the early termination fee dead? Not yet, but it's looking a little haggard.
07-31-2008, 03:25 PM
#2
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That is awsome, more states should do the same damn thing, I think it is BS that they can do that when infact we are keeping there business running. They kinda have you by the *****, esp when there customer service sucks, but you don't want to canx to go to a new company...
John
John
08-01-2008, 12:47 AM
#8
People who usually get hit with the cancellation fee are people who don't manage there money, or the minutes well enough and run up big bills they can't pay, then the service gets shut off and causes them to have to pay the cancellation fee (on top of the big bills). People who are financially responsible rarely end up in a situation where they have to break the contract. JMHO
08-01-2008, 04:35 AM
#9
You can do that now 95% of the time, problem is most phones won't work with different carriers so your still stuck with a expensive phone you now have to try to sell to get any money back. And most carriers give you 20-30 days to try out the service and still get out of the contract without paying the fee if your not happy with the service.
People who usually get hit with the cancellation fee are people who don't manage there money, or the minutes well enough and run up big bills they can't pay, then the service gets shut off and causes them to have to pay the cancellation fee (on top of the big bills). People who are financially responsible rarely end up in a situation where they have to break the contract. JMHO
People who usually get hit with the cancellation fee are people who don't manage there money, or the minutes well enough and run up big bills they can't pay, then the service gets shut off and causes them to have to pay the cancellation fee (on top of the big bills). People who are financially responsible rarely end up in a situation where they have to break the contract. JMHO
Odds are you know enough people with a cell phone to be able to choose one that offers a good signal. Outside of service, most people cancel because they just can't pay the bill.
I'd much rather had a 2 year contract than pay $200+ for a phone.
08-01-2008, 08:04 AM
#10
Most carriers cannot stand on their good service and reputation and have to resort to locking people into a contract. The same with alot of alarm companies that provide monitoring. Their service leaves alot to be desired. Provide a good product and service and there is no need for a contract. What happens when a competitor offers a better rate and you can't switch because you are in a contract. What happens when you change your plan and you with your carrier and they extend the contract from that point in time another 2 years. What if you move and your current carrier has no or a poor signal in the area you move to.