AT&T Raising Early Termination Fees to $325

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In a move that’s sure to bring a smile to its accounting department’s face, AT&T will be raising the fee it charges smartphone customers for early contract termination from US$175 up to $325. The new early termination fee will go into effect on June 1, ahead of Apple’s expected next generation iPhone launch, although AT&T claims the timing is coincidence, according to the Wall Street Journal.

AT&T’s decision to dramatically increase smartphone contract early termination fees falls in line with Verizon’s similar fee jump. In November 2009, Verizon increased its early termination fee from $175 up to $350.

T-Mobile and Google gave Nexus One smartphone owners a shock when they announced early termination fees that totalled $550 — more than the cost of the phone.

For its part, AT&T sees the steep exit cost as reasonable since it pays subsidies to companies like Apple to keep smartphone costs down. An AT&T spokesman called the price hike a “fair approach.”

Industry analysts have been speculating that AT&T’s deal with Apple as the exclusive iPhone partner in the U.S. is coming to an end soon, and that Verizon will get to sell the combination iPod and smartphone in the near future as well. Apple executives, however, have said they are happy with AT&T and haven’t hinted that Verizon will be selling iPhones soon

Since Verizon uses wireless technology that isn’t compatible with the iPhone, Apple would need to make a special version of the device just for the company, and Apple isn’t saying whether or not it wants to make that kind of financial investment. With new 4G network technologies that both AT&T and Verizon will support rolling out over the next couple of years, Apple may wait to bring additional U.S. carriers on board.

As always, Apple is staying tight-lipped about its plans. AT&T’s new early termination fees, however, may leave customers with plenty to say.

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Comments

MyRightEye

It’s a contracted amount, so they can’t raise it for pre-existing iPhone owners without being sued.

Lee Dronick

How does the $325 fee compare to other carriers?

I see the $550 fee for Nexus One, but for other phones.

john

Sure glad I got my T-Mobile iPhone situated a few months ago.  I will never go back to AT&T.

J M

@MyRightEye

Actually they can change the terms for existing contracts. They’ll just send a little letter in the mail saying what the changes are. HOWEVER based on your local state laws you would most likely be able to cancel your account with no penalties within a set period of time (say 30 days) of being notified of the changes because they’re the ones changing the terms of the contract.

geoduck

I’d like to get an iPhone. You know though, I’ve been so unhappy with the contract I’m on (Rogers, it’s Canada) that I’m thinking of dropping my Cell completely when it finally runs out in November. If I do keep one it will be a month to month and I don’t think they will do iPhones that way. I’m just not going to get trapped in another Cell contract.

How does the $325 fee compare to other carriers?

Rogers has been $300 for the last 4 years at least. So if we wanted to cancel our contract it would be $300 x 2 phones=$600. That’s why I’m just waiting it out.

Lee Dronick

Rogers has been $300 for the last 4 years at least. So if we wanted to cancel our contract it would be $300 x 2 phones=$600. That?s why I?m just waiting it out.

My wife and I each have an iPhone 3G and our iPhone contracts expire out in a few months. I don’t know if we will upgrade or not to new iPhones, no real need to unless there are some very compelling features in the upcoming models. My iPhone took a tumble off of a desk and has a crack on the back case. However, it still works and unless the crack grows I will not replace it until absolutely necessary. It is a vertical crack centered on the bottom and about 3/4 inch long, stopping just below the “Designed by Apple” paragraph.

diverreb

When will Apple wake up to the fact that for many areas, mine included, AT&T really sucks!!!!  More dropped calls than ever and no improvement in the dead zones.  I recently drove from DE to FL and back.  Way too many dead areas along 95 and way too many dropped calls along the way.  Apple is willing to put up with lousy service because AT&T gave in to all their demands.

I don’t care how much I have to pay to get back to Verizon, once they get the iPhone….

Trust me…. I’m not alone here…

Lee Dronick

When will Apple wake up to the fact that for many areas, mine included, AT&T really sucks!!!!

Log on to your AT&T account at their website and send them an email. They are probably not even reading the MacObserver.

Substance

It is a vertical crack centered on the bottom and about 3/4 inch long, stopping just below the ?Designed by Apple? paragraph.

Interesting, I noticed a crack in the exact same place a couple days ago on my 3GS.  Like you, as long as it doesn’t grow I’m not concerned about it.

Tiger

All these “jumpers” to Verizon. Lest ye forget, Verizon upped theirs to this amount six months ago. AT&T is playing catch up here.

It sucks. While I like my iPhone 3G, I would have upgraded to the 3GS and paid the upfront cost of the phone, but with the additional early termination fee of the current model, it would have doubled the cost.

So, my choice is to bide my time, pay the $, or jailbreak? The first two cost me serious cash, the third costs me legitimacy. Either way, I’m over a barrel, same as pretty much everyone else. Should a utility, any utility, have THIS much power over its customers that are paying for a service?

acdc1174

I’m going to go a different route on this.  It makes me wonder just how much of a subsidy these telcos are paying to companies like Apple, Motorola, an HTC for these newest smartphones- iPhone, Droid, Nexus One. Ultimately, that is what the ETF is intended for. It allows the telco to recoup the subsidy if the customer bails on the service contract.

Lee Dronick

Interesting, I noticed a crack in the exact same place a couple days ago on my 3GS.? Like you, as long as it doesn?t grow I?m not concerned about it.

Well now I am wondering if that is circumstance or something else is going on. I only closely inspected my 3GS after it fell and assumed that the crack occurred then. Maybe not, maybe it is a weak spot, a design flaw. You all take a look at your iPhones and see if there is a vertical hairline crack on the back centered just above the port.

Bob

I noticed the same hairline crack on the back, in the middle just above the dock connector on my 3G phone.  Since it was past the 1 year warranty period Apple said they could replace it for $199.  Luckily I paid for the phone with my AmEx card, so I submitted a claim to AmEx, they approved it and I got a new 3G phone.  I was hoping to get a 3GS but Apple stores have a stock of 3G phones just for this reason.

daemon

Thank god they raised their ETF! Too long have customers been taking advantage of the reasonably priced phones in AT&T’s stable of phones and then immedietaly jumping ship to another carrier that doesn’t charge $150 a month for a single phone.

ctopher

These are all reasons I don’t own an iPhone. (Or any smart phone for that matter).

Play Ultimate

I’m surprised this is even an issue. . .how often do most folks change carriers? We’ve been with VZ forever (stated when it was AirTouch!) and have had little reason to change.  I think daemon is right; too many people have been gaming the system.

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