Bust a Deal, Face the Wheel

Sprint lost a pretty significant case involving the early termination fees (ETFs) here in California. A contract is a contract and I’m not inclined to cheer the court action nullifying a valid contract between two parties, however it’s also clear that cell phone companies have profitably abused ETFs (e.g. attaching an ETF to a renewal contract even when the consumer didn’t get a new handset) and something needs to be done.

Verizon has a proposal to the FCC that is pretty reasonable. Basically what they are calling for is a national policy on ETFs that allows an opt-out period (similar to a cooling off clause), pro-rated ETFs, and lastly, no ETFs for contract renewals unless the consumer receives a new handset.

While I think this is an issue that needs to be dealt with at a regulatory level, I am not inclined to support judicially inspired chaos that will result from each state regulating the issue independently. What will be a natural consequence of such a market would be handsets that are rendered inoperable on carriers other than the one originally sold on and that can’t be a good thing.

Bonus link, the NY Times has a good piece on ETFs.

200807291129.jpg Sprint Nextel Corp. (S) was dealt a major blow in its early-termination-fee case when a California judge ruled it would have to pay $ 73 million.

[From Sprint Loses Early Termination Fee Case, May Pay $73 Million]

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