Following on Sprint’s move to waive the all-too-common eary termination fee (ETF) for government subscribers, Sprint’s CEO Dan Hesse has announced that his company could cut its ETF as early as December. The announcement is in line with what we’ve expected from Sprint, and bolsters hopes that Sprint will make good on their promise to deliver pro-rated cancellation fees before year’s end.
Early termination fees are essentially penalty fees levied against a subscriber for cancelling their wireless contract early. Wireless carriers are quick to point out that the ETF helps them recover handset subsidies if a subscriber decides to bail on their obligation before their contract term expires. Consumers benefit from subsidized handset prices, but are essentially locked into long-term contracts, preventing them from changing to a service provider with more favorable rates.
Sprint was recently ordered by a California court to refund $73 million in ETF fees to ex-customers, highlighting growing concern over the use of ETFs and their anti-competitive effects. Verizon Wireless was likewise recently ordered to repay $21 million worth of ETF payments back to customers.
Sprint is reportedly working to revamp its billing system before the new, lower ETFs will go into effect. The move will put Sprint in line with its national US rivals by pro-rating the ETF – reducing the penalty fee amount based on the remaining time on contract.
It remains to be seen what the FCC has to say about ETFs.