Sprint Finalizes Early Termination Fee Policy - InformationWeek

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10/31/2008
03:36 PM
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Sprint Finalizes Early Termination Fee Policy

The telecom said its $200 fee will be reduced by $10 per month after month six, but the new policy will only affect contracts signed after Nov. 2.

Sprint announced Friday the details of the changes for its early-termination fee policy.

Starting Nov. 2, the $200 cancellation fee will decrease by $10 per month beginning in month six of the contract. This means the early-termination fee, or ETF, could drop to as low as $50 before the contract expires, Sprint said.

"This policy gives customers additional flexibility, as every month of service a customer completes after month six, the amount of their ETF is reduced," said Will Souder, Sprint's VP of operations, in a statement.

The prorated policy will only affect new service agreements signed after Nov. 2, but it can apply to existing customers if they renew their service agreement. This move is Sprint's latest attempt to improve its customer service, which many believe contributed to the company's loss in subscribers. The company also has implemented a 30-day trial period, an in-store phone setup program, and a welcome call program.

ETFs have long been a point of contention in the wireless industry. Carriers argue that ETFs are necessary to help recoup the cost of heavily subsidized handsets that the majority of U.S. customers use. Consumer advocacy groups say the cancellation fees are overly punitive and limit consumer freedom to switch carriers.

These cancellation fees have been the source of several multimillion-dollar class-action lawsuits. The issue has even caught the attention of the FCC, which is mulling a nationwide policy.

Sprint is just the latest to tweak its ETF policy, as Verizon Wireless got the ball rolling nearly two years ago. AT&T said its fees would start at $175 and be reduced by $5 every month over the life of the one-year or two-year agreement. T-Mobile also changed its policy this year, cutting the ETF in half for customers with 91 to 180 days left on their contracts.

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