Judge ruling on Sprint termination fees is blow to industry

[superconnected]

Source: Associated Press

SAN FRANCISCO (AP) - The fees that cell phone carriers charge customers who break service contracts took a big hit in a California courtroom when a judge said such charges by Sprint Nextel Corp. likely violate state law.

The judge, in a tentative ruling issued late Monday, said Sprint will have to pay $18.3 million to customers who sued over the fees and credit $54.8 million to those who were charged but did not pay the fees.

The same judge is considering other lawsuits against telecommunications companies over their so-called early termination fees, which can range from $150 to $225. This month Verizon Wireless agreed to pay $21 million to settle an identical lawsuit just as trial was starting.

Alameda County Superior Court Judge Bonnie Sabraw rejected Sprint's argument that a state court had no business deciding an issue the company said should be left for federal authorities. And while her ruling isn't legally binding outside the state, it cut to the heart of an ongoing debate in other state courthouses and in Washington, D.C., over the fairness of the fees.


Read more: http://www.komonews.com/news/consumer/26067949.html

[dipsydoodle]

1. In the absense of termination penalties

you'll finish up paying more for the phones. Apart from that - if you don't like the terms of an agreement then don't accept it.

[superconnected]

2. Do you think all bills should be like this - pud etc. So when people

leave them - or can't keep the service anymore because they can't afford to, they should get these fees.

[uppityperson]

5. They are pro-rating the fees, lowering as your time goes on.

I read that in the article. Even they realize that it was unfair.

[Piewhacket]

10. Can't "Accept" illegal terms in contracts...

Not everyone seems to know that in California (where I'm from, but I believe it so in all other states also) a term in a contract which is unlawful under state law generally cannot be "accepted" as part of the contract. These are prohibited terms which violate public policy. The telecoms tactics used to collect the termination fees were also likely unlawful business practices under California law (and elsewhere).

The termination fee by the telecoms were intended to prevent people from switching services (a purpose which itself is not unlawful, but is slimy and maybe ought to be prohibited in a less corrupt world). The tactic was quite effective, BTW. However, the means of accomplishing this slimy purpose was to impose a punative termination fee which exceeded that allowed by law. This wasn't a close call of legality either, it was blatantly unlawful and the telecoms knew it but muscled everyone (FCC should have stopped the practice but instead stonewalled and ignored complaints). In sum, an illegal means was used to obtain a slimy goal, to the enrichment of Texas telescum (where this is mostly coming from) to the detriment of consumers.

There is no doubt they knew of the scheme was unlawful under state law, but apparently thought they could get preemptive federal laws passed. Political winds shifted and apparently the preemptive laws did not quite get passed. Awwwww... Now chickens coming home to roost. About time.

[Truth4Justice]

13. You can usually get a one year plan for 35 bucks more then buy your new phones off of eBay cheaper.

I haven't had a contract for years.

[melm00se]

16. yup

most people don't realize how much the carriers subsidize the handsets. If the carriers are exposed to more risk, then they will shift the burden of the cost elsewhere - namely to the customer.

[Gormy Cuss]

17. Probably not true anymore because there's too much competition.

The contracts with hefty early termination fees made sense in the early days of cell phones because of real costs but that's not the case anymore. There may be justification for some termination fee but a smarter move may be to do away with fees in favor of incentives.

[bemildred]

3. Oh my gosh.

This could mean if you provide lousy service, or your prices are not "competitive", people could "just leave".

[Truth4Justice]

14. When the carriers switched to all digital many rural owners didnt have to pay due to reduced service

Analog phones reach out into rural areas better then digital phones.

[madville]

4. You aren't required to sign a contract to have cell phone service

You sign a contract you usually get a free phone, or at least $100-$200 off the price of a new one. You don't sign the contract you pay $150-$300 for the average new phone and you can quit anytime you want. You get your free phone, sign a contract, decidee to cancel and pay a $180 termination fee in my cell phone company's case.

Sounds about like a wash to me. You don't like the contract part, pay for or provide the phone up front. Don't see what the big deal is.

[bemildred]

6. Well, you certainly ought to have to give them the phone back.

Seems only fair.

[BadgerKid]

7. For the record, there are few phones free upfront

or that cost $10 or $20. However, you still end up with a "contract" of sorts since you are required to add minutes every 2-3 months even with no activity. But there are no termination fees either.

[eggplant]

8. Pay as you go can be incredibly inexpensive

if you are a mild to moderate customer, and don't care about the latest and greatest gadget.

I picked up a Nokia 2610 (a pretty decent phone, for what it is) for $10 with $10 of airtime from AT&T. I dropped $100 into the account, picked up the 20% bonus on the first fill, another $5 bonus for dropping in $100, and voila, $135 of airtime for $110, with a *one year* expiration of the minutes. I didn't refill it for seven months. That works out to just over $15/month including the phone, with no contract. Cheap!

[BadgerKid]

9. True, dat.

My needs are modest, so the pay-as-you-go way works to my advantage. If I had more of a life, I'd probably choose something more mainstream.

[Lugnut]

11. I have a Tracfone.

Unlike many others I don't live my life on my cell phone. I use it now and then when I need to and carry it for emergency purposes. It costs $20 for a 30 unit card every 90 days which is very affordable.

[Truth4Justice]

12. Most pre-paid phones use the same teck as monthy but are only good in metro areas and freeways.

if you get out in the country chances are you won't have a signal rendering the phone useless.

[Sentath]

18. No, you don't BUT

I remember Sprint charging a $30/month premium for going without too.

[Ramonna Villota]

15. Sprint

Used to work for that company ... Nothing good can be said about it...

9 dollars a month is what they charge people who work for them ( that covers everything ) pure profit anything over 9 dollars (3 years ago)