The Warc Blog

The Warc Blog

You Can Run, But You’re Gonna Pay
Robert Passikoff, President, Brand Keys, Inc
Robert Passikoff
In an effort to match Verizon but (AT&T has been quick to point out) in no way related to a potential loss of iPhone exclusivity, AT&T has nearly doubled its penalty for early contract termination.

The bad news is that starting June 1st, AT&T iPhone customers face a $325 termination fee (up from $175). The better news is that the company is actually lowering the early cancellation fee for contracts on non-smartphones by $25 to $150, the theory being that if you spend less on a device, your termination fee should be less and if you spend more your fee should be higher.

Somewhere in there is some phone company logic, but there’s always been a difference between logic and common sense, so don’t wrack your brains about it. The FCC has recently taken an interested in all four major carriers' Early Termination Fees, concerned that consumers aren't given the right amount of information prior to signing up for service, phones, or both.

Currently Verizon is the king of the early termination fee hill with a $350 penalty for smartphones. Sprint and T-Mobile split the difference at $200 for all phones, which pretty much matches up to our Customer Loyalty Engagement Index rankings for the smartphone category driver, “Competitive and Easy to Understand Calling Plans” that also has the 2nd highest levels of expectation for the category’s drivers. So while customers may not like it, they are paying attention to these value aspects of the category.

Until the FCC makes some decision regarding early termination fees, customers should take solace in the old saying that applies to all types of phones: goodbye shouldn’t be painful unless you're never going to say hello again.

Subjects: Consumers, Brands

27 May 2010 14:45

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