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10/16/2007
04:41 PM
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AT&T To Drop Early Termination Fees

The policy change follows on the heels of a lawsuit filed by customers against T-Mobile.

AT&T on Tuesday announced new policies that apply to customers changing calling plans or exiting contracts early.

Starting next month, customers who change a wireless calling plan will no longer be required to extend their current contract with AT&T or sign a new contract.

Customers who terminate a contract early will no longer have to pay a flat early termination fee. The fee will be lowered during the term of the contract. The early termination policy, however, will go into effect early next year and will apply to new and renewing customers who sign a one or a two-year contract.

Customers that choose not to sign a contract can choose the pay-as-you-go option, which AT&T offers with its GoPhone.

"Customers have told us they do not like one-size-fits-all approaches. They are right, and that is why we have made these important changes," said Paul Roth, president of sales and marketing for the carrier's wireless unit, in a statement.

AT&T's policy change follows on the heels of a lawsuit filed by customers against T-Mobile, seeking an injunction that would prevent the carrier from collecting an early termination fee of about $200 from customers. Last week, the California Supreme Court gave a go-ahead for the lawsuit, despite T-Mobile's efforts to dismiss the case. T-Mobile is now facing a class-action lawsuit. Carriers argue they cannot eliminate early termination fees altogether because they wouldn't make a profit, since they already offer subsidized mobile phones to customers. But customers feel that a flat rate that carriers charge is unfair.

One InformationWeek reader wrote in response to an article on the T-Mobile lawsuit: "Two-hundred dollars over 2 years is about $8.33 per month. If the carrier is subsidizing my phone, then they have the right to get back that cost. Charge me $9 per month for each month left on my contract when I cancel. $200 for canceling 1 day before is robbery."

AT&T's new policy to charge a fee based on the term of a contract is not an ideal solution, but it's a start. Other carriers are likely to follow in its footsteps in fear of lawsuits.

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