AT&T has announced that starting June 1, they will nearly double their current early termination fees (ETF) from $175 to $325. According to the Dallas Morning News, and AT&T representitive says that “This move, what we did today, is unrelated to any device announcement or future plans.” Yeah, right.
Before we comment further on that statement, here’s some more details. First of all, “feature phones” i.e. cheaper phones, will actually have a lower ETF as of June 1, down $25 to $125. Also, this fee hike is for new and renewing contracts that start on or after June 1 – existing contracts are not effected. Finally, the ETF for smartphones will drop $10 every month of a contract.
So back to the statement above: of course this is all about the iPhone and to a lesser extent the rise of Android. With the iPhone 4G almost certainly coming out in June, AT&T first of all wants to ensure that people aren’t buying them just to cancel their contracts and then resell them – that and they want to lock subscribers in if someone else gets the iPhone (this certainly will put a little more doubt into whether or not AT&T has the iPhone locked down). Of course, Verizon’s ETF is actually higher at $350, but Verizon doesn’t have the iPhone, so more people are likely to jump ship from Verizon to AT&T still then the reverse (well, at least in terms of hardware, service is another matter).
The biggest winner here could be Sprint. Lots of people were probably already thinking of switching from the iPhone to the HTC EVO 4G, both because that phone looks great, and because of Sprint’s 4G network (although that 4G doesn’t come cheap by any means).
The WSJ first broke the news of the fee increase.