California rules cellphone termination fees illegal
 

http://tech.yahoo.com/blogs/null/99655

wow thats gonna fuck up some plans

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In one of the most significant legal rulings in the tech industry this year, a Superior Court judge in California has ruled that the practice of charging consumers a fee for ending their cell phone contract early is illegal and violates state law.

The preliminary, tentative judgment orders Sprint Nextel to pay customers $18.2 million in reimbursements and, more importantly, orders Sprint to stop trying to collect another $54.7 million from California customers (some 2 million customers total) who have canceled their contracts but refused or failed to pay the termination fee.

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.

Of course, the carriers aren't going to take this lying down. Early termination fees are seen as critical to business, so carriers are expected to look for ways to reclassify the fees (such as by calling them "rates," part of the arcane set of laws that covers the telecommunications industry). The industry is also pushing for the federal government to step in and claim oversight over the early termination fee issue, which would invalidate any state ruling. The FCC is generally more tolerant of such fees, though Chairman Kevin Martin has proposed a plan whereby the fees are decreased the closer you are to the end of your contract.

The FCC may also buy the argument that, since carriers are nationally based (and consumers can use their phones anywhere in the country), that a single policy should apply across the nation, rather than creating a patchwork of legislation that could lead to confusion and chaos caused by having 50 different policies.

Interesting read.

This could really hurt sprint if the appeal fails...

it's a scummy way of doing business they have been doing anyways, to lock in customers with long contracts instead of just providing the kind of service that keeps loyalty


ideal would be hardware sold everywhere and the freedom to sim for whatever company the consumer wishes to :2 cents:

Sweet justice.

sprint sux anyway

maybe now cell phones will be at real prices if people just buy them out right.

No way this is going to stand. You are even going to see consumers defending these companies, inorder to get their Iphones for $199...

Just thought of a new business plan. Cell Phone Leases.... What do you think?

Awesome.. so that must take the teeth out of cell phone contracts.... :)

I think if it was wide open, phones would be even cheaper than they are at these "subsidized" rates

let any phone work on any network, sell them at Fry's and Best Buy, betcha prices will be cheap :2 cents:

"TERMINATION fees are TERMINATED..."

No doubt :thumbsup

I hope they make it ilegal here too

So could someone use this ruling to break their apartment/studio/house leases early without out any penalties? I dont see how it is any different.

Thanks for that information. I'm sure it will be great!

Bout time they do something against those crooks
I have to go thru the BBB to cancel my old sprint contract last Year

by the state with the Terminator for Gov.