AT&T sent a letter to its “Valued Customers” letting them know that beginning June 1 it is going to up its Early Termination Fee (ETF) from $175 to $325. For those who don’t know ETF’s are what carriers charge a customer who wants to end a two-year commitment early based on the fact that when a customer purchased the phone they did so at a subsidized rate. It’s essentially a marketing shell game to allow them to advertise and sell at a lower price while hooking you into their service for a two-years.
Speculation is rampant that this means AT&T knows it is going to lose the iPhone exclusivity sweetheart deal it has enjoyed with Apple, most likely to Verizon, and it is now fearing a stampede to away from its shoddy network, broken promises, and corporate greed. Intriguingly, AT&T is following Verizon’s lead on this, as Verizon upped its ETF on some Smartphones earlier this year, a move that brought FCC scrutiny.
Awhile back the much maligned Sprint network allowed users to end a contract without an ETF if Sprint made any substantial change to the user contract (you know that document you signed but didn’t read when you bought the phone.) There have been users who have tried to force this on AT&T and others in the past, but it is a hard fight to win, and I believe there have already been lawsuits (class action and otherwise) against AT&T about this.
Usually when a new phone debuts and the subsidize price is advertised and everyone goes gaga over a low price point, the math quickly gets posted about the real cost over the life of the contract. You know how that goes. $99 for the phone + $80 over the the two years = $1,920 = $2000. (hypothetical numbers). AT&T is following practice and saying it will reduce the ETF by $10 per month that you are still on contract.
This kicks into effect on June 1. Given that the world is expecting a new iPhone sometime this summer, and the June 1 deadline, I wouldn’t be surprised to see folks taking a gamble that Verizon will be getting the iPhone, cancel out of AT&T at the lower price and pick up another Verizon phone, hoping that a Verizon iPhone is released within the return window. But I wouldn’t count on it.