AT&T raises early termination fee to $350, Verizon rumors abound

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Date: Monday, May 24th, 2010, 03:13
Category: iPhone, News

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AT&T appreciates your business.

And just made it that much pricier to leave early to do business with anyone else.

Per the Dow Jones Newswire, beginning June 1st, new AT&T iPhone customers who wish to cancel their contract with the wireless carrier will need to pay a US$325 early termination fee, up from the existing US$175 fee.

The new fee will apply to all smartphones, including Apple’s iPhone, as well as connected netbooks. For feature and messaging phones, the fees will drop to US$150.

Though change comes on the heels of speculation that AT&T could lose exclusivity of Apple’s iPhone over the next year, though an AT&T spokesperson reportedly said that the increase in the early termination fee to US$325 was not related to one specific device.

“The changes come amid increased regulatory scrutiny and class-action lawsuits over the issue,” the report said. “The Federal Communications Commission has expressed concern that onerous fees make it difficult for consumers to switch their service. Wireless carriers argue the fees are necessary to recoup the costs incurred by the subsidies they provide to lower the initial cost of the handset.”

The change follows a previous move by competitor Verizon, which began charging a $350 early termination fee for smartphone users. Google and T-Mobile also charged a combined US$550 fee for those who canceled their contract on the Nexus One. Both of those recent developments have brought early termination fees under scrutiny from the U.S. Federal Communications Commission.

AT&T and Apple offer the iPhone at a subsidized rate, starting at US$99 for the iPhone 3G, with a two-year contract for the device. Starting in March, Apple began selling contract-free iPhones at a much higher price, as it has done in previous years, to help clear out inventory before the launch of new hardware.

In addition to recouping lost money from a canceled contract, the fees are also designed to deter customers from jumping to another network. The timing of the early termination fee increase will undoubtedly result in speculation about the potential of the iPhone becoming available on a carrier other than AT&T.

Apple is expected to introduce its next-generation iPhone when it kicks off the annual Worldwide Developers Conference in San Francisco on June 7th while rumors of a Verizon iPhone have been persistent since March.

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