A California judge did what he could to make cell phone early termination fees illegal. A superior court judge ruled that early termination fees were illegal under California 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.
Of course an appeal is probably being filed as fast as this sentence is being typed, but what could this mean for the cellular industry if it was passed.
Carriers would no longer be able to trap users into multi-year contracts. However, I think phones would become more expensive for users again. After all, the cost of the phone is usually absorbed in usage charges over the multiple years.
We recently saw this with the Apple iPhone. Customers will pay more in usage charges to offset the high cost of the phone.
Yahoo news reports, "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."
I, for one, would like a reclassification of fees. I think it would be awesome at the very least to give discounts the closer you are to the end of a contract. It might also be beneficial to give loyalty discounts. Like if you sign a new contract with the same company before your terms are up, you are not charged the fee.
On a personal level, I can't tell you how many months we went on the end of our contract with phones that were not working. To get them replaces, we would have been charged an early termination fee and would had to have started the contract over from the beginning. We had been with the same cell phone carrier for four years. We ultimately were so sick of the phones and the troubles we were going through that we switched companies when our contract was up. Had they offered us some sort of discount or waived the fee, we might have stayed.
I think if the early termination fees are done away with, Americans will not mind paying more for the phones. I think it is more beneficial to not be stuck in a long term contract in an industry where technology is changing so quickly.
This is just my two-cents worth. Bravo to the judge in California who took the nerve to stand up to the cellular giants! What are your thoughts? Will this be good or bad for us as consumers?
