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Verizon Attempts To Reduce Termination Fees
According to a Reuters report on May 24, Verizon Wireless
is trying to seal a deal with consumer groups and Federal
Communications Commission to put at rest once and for all
the vexed issue of termination fees charged to customers if
they scrapped their contracts prior to normal expiry.
Consumers have always complained the termination rates are
frighteningly exorbitant and effectively rule out any cancellation
even if a consumer contemplates doing so. Service providers,
on the other hand, maintained it was necessary to recover
the subsidies on handsets and other discounts which consumers
got upfront with most of the popular plans. Even if this logic
was genuine it would mean these termination fees should progressively
decline with time and ideally would be nil with the expiration
of the contract. But a reality check proved otherwise. The
termination charges surprisingly remained same or almost same
throughout the contract period. With positions of concerned
parties being so much divergent, a flurry of law suits was
the only expected outcome, and it has indeed been so. The
situation has become more complex with over 50 states having
different statutes getting involved in this imbroglio.
Verizon took the first step of prorating termination fees
so that it gets lesser and lesser as the contract near its
expiry. News trickling in indicates AT&T will do so by
Monday next while Sprint Nextel is also providing enough signals
it would follow suit before the year ends. This should be
pure music to the ears of numerous subscribers and would surely
reduce the number of suits pending in law courts throughout
the country.
Inclusion of Federal Communications Commission is also a
giant step towards elimination of a plethora of state specific
statutes which make the situation extremely murky. One can
hope at long last there will be an unambiguous guideline which
will be equally applicable to all corners of the country.
However, both sides have still a lot of ground to cover
before any sort of compromise is reached and a public hearing
by Federal Communications Commission is slated on June 12.
(May 27, 2008)
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