What is the rule in
What’s in place here to protect consumers?
Edith Adera
From: Gideon Christian
[mailto:gchristian@idrc.ca]
Sent: 01 August 2008 16:39
To:
Subject: Early cell phone
termination fees illegal
http://tech.yahoo.com/blogs/null/99655
In one of
the most significant legal rulings in the tech industry this year, a Superior
Court judge in
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
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.
Is the
early termination fee dead? Not yet, but it's looking a little haggard.
Research
Intern/Stagiaire
Int`l
Development Research Centre
(IDRC)
Centre
de Recherches pour le Développement International
(CRDI)
150
Kent Str Ottawa, ON, K1P 0B2 Canada
Tel/Tél:+1-613-236-6163
ext
2063
Cell:cellulaire:
+1-613-265-1300
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+1-613-238-7230
Email/Courriel:
gchristian@idrc.ca
www.idrc.ca
/ www.crdi.ca
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