Early Termination Fee (AT&T v O2 UK/Ireland)

[MRU]

So reading up on the front page news about AT&T's early termination fee of $175 I have to say I'm shocked that you get away so cheap from contracts in the USA compared to here.


Here's our terms and conditions

This Agreement commences on the date of your signature and will continue for the Term. During the Term, this Agreement may be ended by you giving O2 thirty days written notice. PLEASE NOTE that if this Agreement is terminated by you giving O2 thirty days written notice during the Term, you are liable for and must pay O2 the remaining total aggregate monthly subscription Charges up to the end of the Term.

For example if I went into O2 tomorrow and bought a new iphone 3g €169 on a €45 per month plan - which is an 18 month contract at that.

I would have to pay 18x45=€810 ($1250) in order to end the contract early.

Seems extortionate pricing in comparison to AT&T....

 

[David2070]

It's like that in the UK on other networks, although I think you usually don't have to pay the VAT.

If you want to get out of a contract, the cheapest way (in the UK) is to switch to the lowest tariff you can and then pay off the remaining months.

 

[sananda]

Seems extortionate pricing in comparison to AT&T....

the contract is a commitment.

 

[David2070]

the contract is a commitment.

That's true and seems fair. If you've got an expensive phone that has been subsidized by the network carrier I'd expect to have to pay to cancel a contract.

Still, it seems like ATT is cheap.

Could you get an iPhone on ATT and then cancel for $175?

 

[Jowl]

Although doesn't it work out that AT&T costs more in the end? There the tariif itself, an extra for the data, extra for the minutes (and as I understand it not only do you get less, incoming calls also use up minutes)

I think O2 have pretty decent iPhone pricing in the UK.

 

[sananda]

That's true and seems fair. If you've got an expensive phone that has been subsidized by the network carrier I'd expect to have to pay to cancel a contract.

Still, it seems like ATT is cheap.

Could you get an iPhone on ATT and then cancel for $175?

it does seem as though at&t let people off easy if they want to end the contract.

i suppose if you have the required information such as a relevant social security number, us address, and can pass the credit check then you get an iphone, sign the contract wait 30 days (the time at which it is not necessary to return the iphone) and then terminate the contract. whether that would affect your future ability to get a phone contract or your credit rating, i don't know.

 

[Kupe]

For example if I went into O2 tomorrow and bought a new iphone 3g €169 on a €45 per month plan - which is an 18 month contract at that.

I would have to pay 18x45=€810 ($1250) in order to end the contract early.

You're not ending the contract early - it appears you're just paying off the remainder of the contract. It makes sense if the phone's subsidy was amortized across the life of the commitment, but it's questionable if you're also paying O2 for phone access services you're not actually going to use. I am a firm believer that a customer owes an ETF for a subsidized phone - and phones should be priced accordingly. But if the ETF far exceeds the cost of the subsidy (plus a little for administrative costs and the like), the provider is simply price gouging. Declining ETFs are a step in the right direction for that.

Here in the US, the government is getting involved, which is usually not a good thing. There's discussion of eliminating the ETF, which in my view is a good thing. However, Telcos aren't going to just give away their phones at a loss - they'll simply adjust the price of the phone accordingly. There are a lot (probably the vast majority) of customers who don't link ETF charges with phone subsidy who will be shocked by the abrupt increase in phone prices.

The real problem is phone companies aren't forthcoming with their pricing. I would simply like them to admit the real price of a phone and plan(s). From that point, they could offer various financial packages to assist those customers who are less liquid than others. One group of customers may prefer to pay full price up front and not have a service contract beyond month-to-month (costs more but has greater flexibility for the consumer). Others may wish to commit to paying off the cost of their phone over time which gets them in cheaper up front, but commits them to a pay-off schedule just like any other consumer credit system. Further deals could be offered to the "full-pay" customers - like when you pay cash for a new car.

To me this is win-win. The consumer gets to see the real price of the product/service they're buying and the Telco sets a price that accounts for any additional costs they may incur, depending on the deal struck with the consumer.

Is this too much to ask for?

 

[samab]

Although doesn't it work out that AT&T costs more in the end? There the tariif itself, an extra for the data, extra for the minutes (and as I understand it not only do you get less, incoming calls also use up minutes)

I think O2 have pretty decent iPhone pricing in the UK.

First of all, that "workout" means realy nothing --- it's a comparison of a 18 month contract vs a 24 month contract. Of course, it's cheaper because you are holding a O2 iphone for 6 months without a service. Secondly, the US iphone plan gives you unlimited mobile to mobile minutes, 5000 nights/weekends minutes and rollover of your leftover daytime minutes.

Considering that the regular priced O2 18 months contract for 600 minutes with 500 SMS is 35 pounds a month --- the same price for a O2 iphone with a inclusive unlimited data plan, the O2 iphone plan is "cheap" by comparison.

 

[kamiboy]

The real problem is phone companies aren't forthcoming with their pricing. I would simply like them to admit the real price of a phone and plan(s).

Here in Denmark they have to by law.

 

[Kupe]

Here in Denmark they have to by law.

That's excellent. Other industry sectors have been compeled to here in the US, but the cell phone industry still gets away with a lot of "fast-and-loose" business practices.

 

[bacaramac]

I have six lines of service with at&t and have cancelled and paid the etf on 5 of the lines so I could open a new line and get a new phone. Since I use smart phones, it is cheaper to pay 175 then to pay non commitment price. It has never impacted my ability to get new lines of service.

The way that I do this is open a 7th line and just cancel it after the 30 days. That way I don't have to change any of the numbers. Again I have done this 5 times with no issue.