One of the big money makers for cell phone companies is the early termination fee. If a user terminates a contract before it expires, they get charged a good chunk of money. I have experienced this with Alltel in the past. I was 30 days from the end of my contract and my phone broke. I could either buy a new phone and full price, buy a phone at a reduced price and extend my contract or I could move my number over to Verizon and add myself to the family plan.
I did the latter and found myself with a $250 charge. Yes, it is on the contract. I am not disputing the fact that I had to pay the $250 fee.
This type of fee has recently been declared illegal in the state of California:
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.
I have a feeling that cell phone companies will be appealing this decision, as they rely on this fee in order to lock their customers into using their service. What about those who just bought a new 3G iPhone for $199? They might be able to get out of their contract early and not face any sort of ridiculous fee. Could this lead to the iPhone 3G getting onto other networks a lot sooner than Apple wanted?
This is an interesting story and I am sure that we have not heard the end of it yet.