News: California Judge Rules Early Cell Phone Termination Fees Illegal

News: California Judge Rules Early Cell Phone Termination Fees Illegal

Anthony Nguyen
Aug 1, 2008

One of the most significant legal rulings in our tech world has just been settled: forcing people to pay termination fees if they want to break their contract is in fact, a violation of the state law. In this particular case, Sprint is being ordered to pay their customers $18.2 million in reimbursements and more importantly, dropping their practice of collecting termination fees for their 2+ million customers.

"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."

I always found those fees ridiculous - likewise to the practices of Comcast as they try to stack all these weird sounding fees on top of my bill every month. That said, I believe this is a step in the right direction; hardware may be a little bit more expensive, but having the ability to pick the provider you want with the hardware you've picked out should be something worth looking into.

[via Yahoo Tech]

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