John Paczkowski

Recent Posts by John Paczkowski

AT&T’s New Early-Termination Fee for the iPhone: $325

att_iphoneA word of warning to AT&T subscribers who would switch carriers when the company’s iPhone exclusivity deal with Apple finally ends: The cost of doing so will soon rise–substantially. Come June 1, AT&T is raising its early-termination fee on smartphones to $325 from $175.

The increase comes amid speculation that AT&T’s (T) iPhone-exclusivity deal with Apple (AAPL) is nearing its end. But a company representative tells me it has “nothing to do with the iPhone or any other device.”

$325. That’s a pretty steep increase from $175. Though to be fair, it’s not quite as bad as the one already implemented by rival Verizon (VZ). Last November, that carrier doubled its smartphone ETF from $175 to $350, a move AT&T was quick to cite as partial justification for its own decision.

And, indeed, the company is following in Verizon’s footsteps here. Like its rival’s ETF, AT&T’s drops $10 per month for each month of a two-year contract. Which means that at the 23rd month of a two year contract, AT&T subscribers must pay $95 to leave the carrier. The contract is nearly over, yet subscribers are obligated to pay nearly a third of the full ETF if they break it at that time.

Now it’s true that ETF’s were created as a means of recovering legitimate costs associated with subsidizing mobile phones. If AT&T is paying a $325 subsidy for the iPhone, the company should be able to recoup that money when customers break their contracts. But does it really stand to lose $95 if they do so in the 23rd month? Doesn’t seem likely if those customers can walk away just a month later without consequence, taking their handsets with them.

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