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.