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Old 07-31-2008, 05:46 PM   #1
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For Sprint Phone Users!

California judge rules early cell phone termination fees illegal : Christopher Null : Yahoo! Tech

California judge rules early cell phone termination fees illegal

Thu Jul 31, 2008 12:48PM EDT

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In one of the most significant legal rulings in the tech industry this year, a Superior Court judge in California has ruled that the practice of charging consumers a fee for ending their cell phone contract early is illegal and violates state law.

The preliminary, tentative judgment orders Sprint Nextel to pay customers $18.2 million in reimbursements and, more importantly, orders Sprint to stop trying to collect another $54.7 million from California customers (some 2 million customers total) who have canceled their contracts but refused or failed to pay the termination fee.

While an appeal is inevitable, the ruling could have massive fallout throughout the industry. Without the threat of levying early termination fees, the cellular carriers lose the power that's enabled them to lock customers into contracts for multiple years at a time. And while those contracts can be heinously long, they also let the carriers offer cell phone hardware at reduced (subsidized) prices. AT&T's two-year contract is the only reason the iPhone 3G costs $199. If subsidies vanish, what happens to hardware lock-in? Could an era of expensive, but unlocked, hardware be just around the corner? It's highly probable.

Of course, the carriers aren't going to take this lying down. Early termination fees are seen as critical to business, so carriers are expected to look for ways to reclassify the fees (such as by calling them "rates," part of the arcane set of laws that covers the telecommunications industry). The industry is also pushing for the federal government to step in and claim oversight over the early termination fee issue, which would invalidate any state ruling. The FCC is generally more tolerant of such fees, though Chairman Kevin Martin has proposed a plan whereby the fees are decreased the closer you are to the end of your contract.

The FCC may also buy the argument that, since carriers are nationally based (and consumers can use their phones anywhere in the country), that a single policy should apply across the nation, rather than creating a patchwork of legislation that could lead to confusion and chaos caused by having 50 different policies.

Is the early termination fee dead? Not yet, but it's looking a little haggard.

LINK: Sprint early termination fees are illegal, judge rules

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Old 07-31-2008, 06:35 PM   #2
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I hope this holds up. I've been thinking about switching to an iPhone since the plan and phone would be about the same as I what my Sprint phone & plan cost me, but I hate the thought of having to wait for the contract to end or pay a stupid $150 (or whatever it is) termination fee.

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Old 07-31-2008, 09:11 PM   #3
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I used to work at a call centre taking customer support calls for Sprint Nextel, and I was always disgusted at the way that company treats their customers. Any excuse to charge an extra fee or lock the customer into something that would end up costing them both time and money in the long run. Don't like it and want to cancel? You owe us $200 beans just for the privilege. Don't want to pay it? We'll take you to court and make it so that to fight the charge would cost you at least ten times more than the fee itself. Thank you for choosing Sprint Nextel and have a nice day!

Fuck, I hope that company runs right into the ground. The sooner, the better.
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