AT&T to Impose US$175 Early Cancelation Fee for iPhone

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Date: Monday, June 25th, 2007, 09:20
Category: iPhone

iphonehand.jpg; border=
You’re looking forward to the iPhone‘s release on Friday.
And you’ve given somewhat consideration to naming your first-born child “iPhone”.
According to an article on boston.com, this might be an expensive choice to get out of.
In addition to spending US$50 million to beef up its wireless network, the Boston Globe has discovered that AT&T plans to charge customers who break their two-year iPhone contracts a US$175 early termination fee. While an early termination fee is somewhat common, these are usually put into place to help wireless providers recoup subsidies and discounts offered to customers agreeing to go with the service.
According to JupiterResearch analyst Michael Gartenberg, who termed the early termination fee “a little odd”, the fee seems like a bid by AT&T to boost its revenues by providing an obstacle to cancelation and hanging onto more affluent customers for as long as possible.
AT&T has yet to disclose how it will handle or charge customers under existing contracts who want to upgrade to the iPhone early and swap out their current plan in exchange of one offered with the iPhone.


iphonehand.jpg; border=
You’re looking forward to the iPhone‘s release on Friday.
And you’ve given somewhat consideration to naming your first-born child “iPhone”.
According to an article on boston.com, this might be an expensive choice to get out of.
In addition to spending US$50 million to beef up its wireless network, the Boston Globe has discovered that AT&T plans to charge customers who break their two-year iPhone contracts a US$175 early termination fee. While an early termination fee is somewhat common, these are usually put into place to help wireless providers recoup subsidies and discounts offered to customers agreeing to go with the service.
According to JupiterResearch analyst Michael Gartenberg, who termed the early termination fee “a little odd”, the fee seems like a bid by AT&T to boost its revenues by providing an obstacle to cancelation and hanging onto more affluent customers for as long as possible.
AT&T has yet to disclose how it will handle or charge customers under existing contracts who want to upgrade to the iPhone early and swap out their current plan in exchange of one offered with the iPhone.

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One Response to “AT&T to Impose US$175 Early Cancelation Fee for iPhone”

  1. The AT&T $175 early cancellation fee for the iPhone could be more benign than evil. The legions of Podstruck (Millennials) are known to anger quickly and see things in absolute terms. Also, Mac and iPod users have little experience with buggy, crashing systems. So if ATT are being cautious in judging the robustness of their network and want to block a zillion cancelled accounts the first time some glitch blows away a million iPhones, they might reasonably want to slow down rage-based cancellations to give them time to fix things. They can tell the irate customer, “look it will cost you $175 to cancel your account, but we will rebate you $20 on your bill to say we are sorry for the loss of service.”
    Much more key to the iPhone’s success on day one, will be how AT&T prices the data service. If the customers see the service as a fair deal, a big success is on the way. However, if AT&T looks like they are out to pick the pockets of iPhone users evrey month forever, there may not be any sales.
    The iPhone can only succeed if the consomer never feels economic pressure against actually enjoy the phone. If it is going to cost $3 in data fees to look up that Sushi restaruant in the Demo, the iPhone will have no sustained sales. Also, probably 80% of the volume of iPhone services in the first six months will be owners showing off the iPhone to others (and selling more iPhones), so both Apple and AT&T need to recognize those free sales demos they will be getting and price services accordingly.