Wireless Carriers to Strike Deal with Government on Termination Fees

It is possible that cell phone users may no longer face expensive charges when they terminate their service with carrier companies, says the AP. Verizon Wireless, in conjunction with several other major cell phone companies, actually initiated the proposal, drafted to the Federal Communications Commission.

The proposal is likely the culmination of several lawsuits involving dissatisfied users against various big-league wireless carriers all across the country, not to mention the introduction of the “Cell Phone Consumer Empowerment Act” by democratic senators in West Virginia and Minnesota as early as September. The act proposes termination fees proportionally assessed as well as a thirty day window for users to cancel their contracts.

By the same token, the proposal Verizon et. al. submitted to the FCC agrees to let users either terminate the service within thirty days of signing up or prior to ten days after receiving the first bill, without incurring penalty charges. Furthermore, those penalty charges which do apply will be based on the amount of time an individual consumer has left on his or her contract. In other words, a user who has only two months left on his or her contract will pay a prorate sum rather than a flat rate of at least $175. This would especially save money for any groups who take advantage of the many family plans offered by major wireless companies, who may have upwards of three cell phones from the same carrier and can pay as much as $200 to cancel them all.

In return, the cell phone companies involved wish to have the charges dropped in the state courts where they are involved in lawsuits filed by angry customers.

Until this point, most wireless carriers defended themselves by explaining that the termination fees -- termed “exorbitant” by consumers interviewed by the AP – are necessarily priced because they have to cover the cost of the mobile devices. Many cell phone companies have long-term contracts with the hottest new phones and the costs for those phones are paid for by the sign-up fees of new customers.

As of this time, the FCC has neither reached a decision nor offered a comment on the issue.

(May 22, 2008)