Consumers are getting some relief as major wireless-phone carriers are reducing hefty early-cancellation fees for service contracts.
For years, wireless firms charged up to $200 if a customer signed up for a contract but opted to drop the service before the two-year term was up.
The fees have caused complaints from consumers who want to cancel after their first bill is higher than expected.
Federal Communications Commission officials said they received more than 3,700 such complaints in 2006 and 2007.
“We’ve never bought into the idea that consumers should have to pay in order to shop around for cellphone service,” said Bob Williams, director of , a project of Consumers Union that focuses on communications issues. “We don’t think they’re necessary at all,” he said of the fees.
Several of the largest carriers have been reducing the termination fees, saying they want to offer customers more choices. In 2006, Verizon Wireless reduced its $175 termination fee by $5 for each month that a customer remains with the company. AT&T matched that policy as of May 25.
As of June 28, T-Mobile began prorating its $200 fee: A customer would pay $100 for canceling six months early or $50 for canceling three months early. Canceling with one month to go would cost either $50 or the standard monthly charge, whichever is less.
Sprint said it will charge a lower fee by year’s end.
“Our competitors offered it before we did, but we’re responding,” said Sprint spokesman John Taylor. “If we didn’t intend to prorate, the consumers would send us a message.”
Consumer advocates say the fees are still too high.
Wireless carriers, however, say that long-term contracts allow them to subsidize the phones they sell.
The FCC has waded into the issue, holding a recent public hearing on early-termination fees, which are also being imposed for broadband and video service contracts. FCC chairman Kevin Martin said it may be better for the federal government rather than the states to regulate such contracts.
But some consumer advocates oppose federal oversight if it results in customers losing the right to sue in state courts.
Fees dropping
Several of the largest wireless carriers have been reducing termination fees.
Verizon: Verizon Wireless in 2006 reduced its $175 termination fee by $5 for each month that a customer remains with the company.
AT&T: AT&T matched Verizon’s policy as of May 25.
T-Mobile: T-Mobile began prorating its $200 fee as of June 28. A customer would pay $100 for canceling six months early or $50 for canceling three months early. Canceling with one month to go would cost either $50 or the standard monthly charge, whichever is less.
Sprint:Sprint said it will charge a lower fee by year’s end.
