Government // Mobile & Wireless
News
10/23/2008
06:20 PM
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Sprint Nextel To End Early Termination Fees

Previously, the wireless companies usually charged $200 when a subscriber canceled a contract before its conclusion.

The FCC, which has been considering creating an early-termination plan for cell phone users, may not need to order one now that the last holdout has come around. Sprint Nextel said this week it plans to begin cutting the fees as early as December.

The other major cell phone service providers -- AT&T, T-Mobile, and Verizon Wireless -- already capitulated on the issue, under pressure from consumers who filed lawsuits over what they regarded as onerous and unfair early-termination fees.

The Associated Press reported that Sprint chief executive Dan Hesse said in an interview this week that the lowered prices could begin as soon as December. This summer, a California judge, acting on a consumer lawsuit against Sprint, said the early-termination fees probably violate state law, and he ordered Sprint to reimburse customers more than $73 million. Consumers also pressured other wireless service providers with state lawsuits.

Sprint and other cell phone service providers argued they needed to charge early-termination fees because they need to recoup some of the investment they provide to underwrite the handsets and services customers receive.

Sprint is expected to generally follow the early-termination fee plans adopted by other service providers whereby such fees are gradually reduced each month in a typical two-year plan. Previously, the wireless companies usually charged $200 when a subscriber canceled a contract before its conclusion.

The FCC has looked at the issue, too, and Chairman Kevin Martin has argued there should be a better way than filing court suits for dealing with early-termination fees.

"Too often consumers are surprised that the amount they owe on their first bill is not what they expected, only to then learn that their 'trial' period already ended and cancellation will result in paying the early termination fee," Martin said recently.

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