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Lawmakers Upset by IPhone Termination Fee

breitbart.com — WASHINGTON (AP) - The Apple iPhone has enjoyed favorable reviews since its recent debut, but it came in for some rare criticism on Capitol Hill on Wednesday. The issue arose at a hearing on whether Congress should grant the cell phone industry's wish and pre-empt states from regulating wireless phone companies. State public utility commissions..

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  • Ogre73, on 10/31/2007, -13/+22" The phones, which cost between $500 and $600—are usable only on AT&T Inc.'s wireless network and will remain that way until 2012." this is the real news in this story.
    • brutalentropy, on 10/31/2007, -4/+22That's not news. It's been known since shortly after the iPhone was announced that Apple had a 5 year agreement with AT&T.
      • jman8888, on 10/11/2007, -5/+3Dang. I hoped it was max 2 years. AT&T is screwy here
        • TheKricket, on 10/11/2007, -1/+2methinks att is just trying to, oh i dont know, make a bit of money off of the deal

          keeping the iphone exclusive to att for 5 years seems like a complete win for att to me...
    • anillop, on 10/11/2007, -0/+3Well that sucks, I like the phone but there is no chance in hell I would ever go back to AT&T again. Their network is horrible and so is their customer service.
      • kenok, on 10/11/2007, -0/+4So which telco companies have 'consistent' good customer sevice?
        • prammy, on 10/11/2007, -0/+2I have had service from most of the major cell services and T-Mobile has been the best for me so far. Sprint was not too bad either.
    • bemenaker, on 10/31/2007, -3/+5WTF Hello congress, wake up, this is nothing new, where the hell have you been?! This is standard operating procedure from these anti-competitive douchebags. Thanks for finally seeing this for the first time in your life.
    • winnch, on 10/11/2007, -3/+3That's not news.

      Congress is playing bully with American business because they can't get anything else done. Pathetic. I always knew Democrats (in Washington, that is) were weak and pathetic, but this is a new low considering we have troops overseas who need to come home.
  • pintomp3, on 10/31/2007, -5/+58if you are paying full price for a phone, it shouldn't be locked to any network and you shouldn't have to be under contract since they are subsidizing the cost. that being said, people bought it know this anyway.
    • Jaymoon, on 10/11/2007, -4/+21Exactly... What are people complaining for?

      You agree to the contract knowing you are locked into AT&T, and somehow after a couple weeks you are upset that somehow AT&T and/or Apple tricked you?
      • Archimboldo, on 10/11/2007, -0/+1If I bought the iPhone knowing the contract, but deeming the cool factor to be worth it, I would still grumble about AT&T anyway. I think it's fair enough. IMHO the arrangement could have been even better for both AT&T and customers if AT&T hadn't risked pricing themselves and the iPhone out of business. I guess that's a risk AT&T is willing to take, short-sighted as it appears to me.
    • thcobbs, on 10/31/2007, -26/+4You do realize that you AREN'T paying full price for the iPhone? I would wager that the actual cost is around 800 and 1000 instead of the 500 and 600.
      • Timberwolfl, on 10/11/2007, -5/+13And the cost to manufacture said POS is around $200-$300 iirc.
      • reed311, on 10/11/2007, -3/+15No, that is full price. They have already said it is not subsidized and everyone is paying full retail for it.
      • Stradenko, on 10/11/2007, -4/+10I think you mean $220
        http://digg.com/apple/iPhone_Costs_A_Mere_220_To_Make
        • Timberwolfl, on 10/11/2007, -1/+4Yes, thank you, I was too lazy to do my own search :)
        • HerrEisenheim, on 10/11/2007, -7/+5"To make" is deceptive. It might cost $220 in parts, but that doesn't mean it cost $220 to make. When all the costs of production are factored in, it costs a hell of a lot more than $220. Hell, you could probably buy a box of BMW parts to build your own M5 for $50,000.
        • skratchnerd, on 10/11/2007, -0/+1I mean I know those little kids in China get paid something for all of their hard work. You don't really think that figure of $220 factors in utilities for the plant and all the tiny salaries for the little workers who slaved away for ya? Do you ?
    • adairnic, on 10/11/2007, -12/+4AT&T is providing a subsidy in the form of a reduced monthly service cost
      • OMGWTFROFLMAOx2, on 10/11/2007, -3/+1link?
      • tdowling, on 10/11/2007, -2/+2They have a pretty confusing cost table, but it looks like a Blackberry with unlimited data and no text messages is $29.99. The iPhone plan with unlimited data and 200 text messages is $20
        http://www.wireless.att.com/businesscenter/popup/dataconnect-comp-table.jsp#blackberry
        • TimmyGUNZ, on 10/11/2007, -0/+3Yeah, but the Blackberry unlimited data plan is only $20 on T-Mobile. AT&T is making a pretty profit off BB data plans.
          • tdowling, on 10/11/2007, -0/+2So they're not so much subsidizing for the iPhone as overcharging for everything else.
      • cliffr39, on 10/11/2007, -1/+1"AT&T is providing a subsidy in the form of a reduced monthly service cost"

        it's actually the opposite. they are moving the discounted service costs and charging full price. The voice plan was $32.99 for me but they removed my discount and it's now $39.99. That $29.99 data/200 sms is the only thing that is of any perk, but look at the next plan up $39.99 data/1500 - same as regular phones and not discounted. not sure what you think is/was reduced costs.
    • gordonf238, on 10/31/2007, -5/+3AT&T does not require a contract. You are free to use the iPhone on a month-to-month basis.
      • skratchnerd, on 10/11/2007, -1/+1Yes sir! all you have to do is input all 9's for your SSN when you are activating it [thru iTunes] and you brick the phone. At least you are semi-free from AT&Ts jaws. You still can't use the phone anywhere else if you leave though. Unless we see an unlocked one REALLY soon, I will stick w/ my XV6700 :P
    • tdhurst, on 10/31/2007, -1/+6Don't like it, DON'T ***** BUY IT. Period.
  • Quix, on 10/11/2007, -4/+29Agreed, if there is no hardware subsidization, the carrier has no real justification for an early termination fee. I'm loving my iPhone and I have no problems with AT&T service (yet), but having paid *$599* for a phone there is no way I should have to pony up another $175 if I wanted/needed to opt out later.

    I thought the lack of hardware subsidization would result in some kind of subsidization of the calling plans (X months free or at a discount), but this is not the case. I'm paying full-price for the hardware and full-price for the service plan. Early termination fees should not apply.
    • geminitojanus, on 10/11/2007, -4/+6There's always a contract termination fee, even if you bring your own phone. They do this because when you sign a contract that you're going to be paying them money for the next 2 years, they want you to either pay them money for the next 2 years, or they want you to pay them a fraction of the money that they would have made anyways. Either way it's bad for consumers and good for the companies.

      If we had a congress that fought for us, they'd completely separate the phone companies from the phone builders, and one would simply buy whatever phone he/she liked, and use it with whatever network he/she liked. Apple is actually fighting for this kind of access. Look at what they've done, they let you buy and take the phone home without any strings attached, and if this level of deregulation ever happens, adding a new carrier is as easy as updating iTunes.
      • adage, on 10/11/2007, -5/+0There is NOT always a contract termination fee, especially if you bring your own phone. Even with Cingular (AT&T) a customer was able to sign up with no contract. The downside to doing so would be no Mobile to Mobile because free M2M was a "promotion," but big deal, beats having a contract. No commitment, and no ETF.
        • geminitojanus, on 10/11/2007, -1/+2Uh, if you sign up without a contract, you're not in a contract, thusly there's no Contract Termination Fee.

          Your logic is astounding.
      • archer75, on 10/11/2007, -1/+2If you buy your phone at full price there is no contract. I have done this. Paid full price for a phone from another source with no contract. I can cancel whenever I want as I have no contract.
    • gordonf238, on 10/11/2007, -1/+2AT&T offer a month-to-month plan with the iPhone. Furthermore, since AT&T will be the exclusive carrier of the iPhone until 2012, why WOULD you terminate your contract? To use iPhone as an 8GB iPod? $599 is a bit much for a Nano, isn't it?
      • skratchnerd, on 10/11/2007, -0/+1I thought iPhone "features" were disabled w/o AT&T service. Features meaning the iPod (video and music). Can anyone confirm that?
    • anewname, on 10/11/2007, -0/+1Here in Canada a termination fee for a contract can easily be $300 and the phone is still locked to the network, even if you spent a pretty penny on a smart phone.
  • Sarki, on 10/11/2007, -11/+3Seems to be a dupe of this:
    http://digg.com/gadgets/Open_Internet_Coalition_wants_unlocked_iPhones_for_everybody
  • BufordT, on 10/11/2007, -6/+38It's called reading what's in the damn contract before you sign it. If anyone was truly concerned about possibly having to bail out later, then you should have asked questions. In what other business can you opt out of a contract and not have to pay the fee that was agreed upon and signed by both parties?
    • aposter, on 10/11/2007, -2/+4Ummm, just guessing, but... Contracts that have been deemed unlawful and exploitive? Usually takes a court case to decide that though.
      • r3zonance, on 10/11/2007, -2/+4But this is a fairly reasonable contract. You terminate early, you pay the costs you would have paid upto the end of the contract.

        Basically you're agreeing to pay them x dollars at the very least.
    • gordonf238, on 10/11/2007, -4/+5I agree completely. Americans have grown lazier over the years. They no longer read anything they sign, and then whine and blame big corporations for stealing their money.
    • Novagenesis, on 10/11/2007, -3/+2It's called not being given much of a choice due to deals struck between competing companies to screw the customer.

      In retail, in general, you're never bound so harshly to a contract that if you need to stop paying you need to give MORE money to do so... and it wouldn't be the case in the cell market unless the major cell companies agreed to make it so.

      So BufordT, let's say YOU want to buy a cellphone plan, but it has to be reasonably priced (every phone call you make is profit to them anyway), and it can't have an early termination fee. What do you do? You don't get a cellphone...you can't live without a cellphone these days
      • geminitojanus, on 10/11/2007, -0/+2You can sign up Month-to-Month or Pre-paid, but it's still a PITA. But hey, no Contract, no Early Termination Fee.

        The big thing here is that everyone's freaking out about something that's been true for just about as long as there have been cellphone companies; the iPhone has nothing to do with any Early Termination Fee. I had an ETF on my first cellphone, a Nokia 1100, and we'll continue to have ETFs until Congress finds them to be not in consumer's interests (which, from the looks of things, will come three months after the heat death of the universe).

        This is just line blurring; Apple has nothing to do with AT&T's, Verizon's, Alltel's, Sprint's love for their Early Termination Fees on all of their phone contracts.
        • iceperson, on 10/11/2007, -0/+1In most early termination fee examples there is "consideration" (legalese) on the part of the cell phone company. They are agreeing to discount the phone and you are agreeing to use their service for a period of time. In the case of the iPhone you're saying you will use their service for a period of time but they aren't giving you anything in return for that promise (a cell phone company reserves the right to cut your service at any time.) In contract law this is clearly an unenforceable contract.

          http://en.wikipedia.org/wiki/Consideration_under_American_law#Lack_of_Consideration
          • ahknight, on 10/11/2007, -2/+1Not really. They're providing you with service and you're providing them with the agreement. And they're providing you with more lawyers than you can count on both hands, so they'd win...
          • iceperson, on 10/11/2007, -0/+1No, your monthly payment is "consideration" for your monthly service. Oh, and people sue companies with lots of lawyers all of the time and win.

            http://arstechnica.com/news.ars/post/20060713-7257.html
      • r3zonance, on 10/11/2007, -1/+1But how can an EXCLUSIVE deal (which is legal) be exclusive if everyone has what is on offer?

        And regarding the data plan, the iPhone's is cheaper than a Blackberry's unlimited data plan.
        • cliffr39, on 10/11/2007, -0/+0how is it cheaper? they are both $30 - oh you get a bonus 200 messages? that's crap, especially since you lose those 200 when you add the $10 1500 package onto it. It should be 1700 not 1500 together.
      • Novagenesis, on 10/11/2007, -0/+1but how is an EXCLUSIVE deal even in Consumers best interests? (which means it should be illegal)
    • iceperson, on 10/11/2007, -3/+2"In what other business can you opt out of a contract and not have to pay the fee that was agreed upon and signed by both parties?"

      How about every one? I suggest you lookup "Adequacy of Consideration'
      • r3zonance, on 10/11/2007, -1/+3From what I gather "Adequacy of Consideration" is not a guaranteed get out.
        • iceperson, on 10/11/2007, -1/+3http://en.wikipedia.org/wiki/Consideration_under_American_law#Lack_of_Consideration

          If there is no consideration on the part of the cellphone company the contract is unenforceable. In the iPhone example the customer is agreeing to pay for the service for 2 years without any "consideration" from AT&T because AT&T reserves the right to cancel your service at any time. Usually the cellphone company says that their subsidy is "consideration", but they can't say that is the case when they're talking about the iPhone because they aren't subisidizing the cost.
  • timusca, on 10/11/2007, -8/+6So all they have to do is say that the original, no-contract price of the iPhone is $1500. Now, all of the sudden, you're getting a deal. And if someone is stupid enough to pay $1500 for the iPhone to avoid a contract, then more power to AT&T's bank account.

    Sounds like a plan.
    • BobOki, on 10/11/2007, -4/+4Thats all well and good, cept an article was released saying the iphone only cost like $250 to make..
      • screwzluse, on 10/11/2007, -4/+3How much it costs retail is up to the manufacturer. It doesn't matter how much it cost them to actually make.
        • Novagenesis, on 10/11/2007, -1/+3It's technically illegal to abuse a monopoly by overcharging -too- much. How much is "too much" is up for debate.

          Charging 1500 a unit for something that cost 200 to make, and expecting 1,000,000 sales, is probably excessive.
        • r3zonance, on 10/11/2007, -1/+1How does Apple have a monopoly on the Mobile phone market though? You can charge what you want for your product, doesn't mean people will pay it though.
      • r3zonance, on 10/11/2007, -0/+1"Thats all well and good, cept an article was released saying the iphone only cost like $250 to make.."

        But that didn't come from Apple did it. It was the usual mindless analyst conjecture, that isn't worth a damn. And besides, no successful business sells product at cost, otherwise they wouldn't be successful would they.

        Besides the parts required to make something is only part (no pun intended) of the cost. You have to including shipping, the products design, packaging (and it's design), initial and ongoing manufacturing costs, etc. etc.
    • jonshipman, on 10/11/2007, -1/+1and Ferraris cost $10,000 to make.
    • jonshipman, on 10/11/2007, -0/+1and Ferraris cost $10,000 to make.
  • trghpy, on 10/11/2007, -2/+48Who knew it'd take the iPhone to wake up a congressmen about how much cell phone companies have been raping us.
    • cactus476, on 10/11/2007, -1/+5What? Something good coming from the iPhone?
    • teadrinker, on 10/11/2007, -3/+1Raping? We have some of the cheapest cell phone use in the world.
      I have a plan for 3 cellphones, with 900 shared minutes, free network, free nights and weekends, for $60 a month.

      Of course they try to make the buck on all the extras...and lock the phones as much as they can. So I simply do not use those services. If a company comes along with unlocked phones and similar prices, I would switch in a heartbeat. But no such beast exists.
    • trekkie, on 10/11/2007, -1/+2Before you mention the wake up call angle you might look at the person who brought it up and who his largest contributor is.

      ....Sprint / Nextel.

      Nice. It's not them looking out for the consumer, Sprint is mad they didn't get one and didn't think to lock people in like this.
  • Wivell, on 10/11/2007, -1/+9A lot of people seem awfully surprised that a cellular service carrier is trying to screw their customers.

    I dunno, I guess I'm just not doing that kids face from Home Alone over here like everyone posting these stories.
  • reed311, on 10/11/2007, -6/+7The problem is, is that AT&T has exclusive rights to this product which gives consumers no choice on where they want to use the phone. Not only do they have no choice, but they also have to pay a termination fee. This fee cannot be justified as they are paying full retail price for the phone and it is not subsidized in any way. It is a way to punish the customer for choosing the IPhone. Yeah, I know they can be unlocked, etc but that is irrelevant.
    I don't own an IPhone and I don't plan to, but it really is a sneaky business practice. I don't know about illegal but I believe it is unethical.
    • r3zonance, on 10/11/2007, -2/+4"Not only do they have no choice, but they also have to pay a termination fee."

      Consumers do have a choice. And the choices are as follows:

      1. AT&T and any handset they like.
      2. AT&T and an iPhone.
      3. Other carrier and any handset other than an iPhone.

      That's 3 choices without even going down to specific brands of non-iPhone.
    • teadrinker, on 10/11/2007, -0/+2So why did Apple decide to force the consumers to connect to AT&T? Are they getting kickbacks?
    • h3smith, on 10/11/2007, -1/+2and who ***** cares? if you don't want to possibly pay the termination fee don't by the ***** phone. it isn't a "monopoly"
    • OrangeTide, on 10/11/2007, -1/+1@teadrinker

      Apple chose AT&T because they wanted a partner in the market. In the cell phone business if you don't have a big cellphone company behind you, you can quickly be shut out. Apple felt that AT&T was the "best", probably just based on that they have the widest coverage and most customers. Enabling more people to use iPhone than choosing a different carrier.

      People get all upset that they are "forced" to use AT&T to have an iPhone. Look nobody is forcing you to get an iPhone, there are other cell phones out there. It's not the first and only cell phone ever.
    • locojones, on 10/11/2007, -0/+1"Not only do they have no choice, but they also have to pay a termination fee."

      You do have a choice, don't enter into a contract if you don't want to pay an ETF. It's that simple.

      "This fee cannot be justified as they are paying full retail price for the phone and it is not subsidized in any way. It is a way to punish the customer for choosing the IPhone."

      Actually the fee is completely justified. By purchasing the phone, you agree to a two-year term of service during which you promise AT&T you will pay for your service. If you choose to break that promise during the term of your contract, you have agreed to a pre-determined penalty for terminating the contract early. It's as simple as that. If you don't want to pay an ETF, don't cancel your contract. But there are penalties to breaking your contractual agreement, and you're actually lucky that the cell phone companies give you the option because the alternative is no ETF clause, not allowing you out of the contract at all, and then suiing your for breach of contract when you fail to pay your bill.

      And I wish you iPhone fanboys would quit trying to link the ETF to subisidies because they're totally unrelated. An ETF is a liquidated damages clause for the cellphone company to recoup apre-determined amount of costs that are associated with keeping your dumbass in a contract. It reflects your acquisition cost, the cost of processing your breach, etc. If it were related to some sort of subsidiy on the phone, you'd expect the ETF to vary based on the phone you purchased, but it doesn't, so logically it's unrelated.

      And how does it punish the poor iPhone users? It's in everybody's contract, so quit trying to make yourself feel special.
    • beatusmongous, on 10/11/2007, -0/+0We don't have a choice? Sure we do. We can sell the iPhone on eBay or to our AT&T friend if we don't want it. That's our choice. I can't believe no one has thought of that yet?
  • Mosatii, on 10/11/2007, -3/+3Just line out, initial it, and hope they don't notice.
  • TurboDerek, on 10/11/2007, -6/+8$175 is a bit more then 2 months of the standard service plan. That's not a bad fee if you decided to break a contract. Much better then a apartment or car lease termination fee.
    • 3adkied, on 10/11/2007, -1/+4Apartments and cars are significantly different. In the case of an apartment, it takes time to find a new tenant. Without proper notification, it could sit vacant for months while they still have to pay a mortgage. In the case of the car, if you break the lease, you probably haven't yet paid back the depreciation for using the car, and they may be forced to sell it for a loss.
      Neither of these really applies to cell phone service. What does the ETF really represent? A SIM card doesn't cost that much. It can't cost that much to go on the computer and de-activate my account. Likewise, the loss of my account doesn't force them to go out and find someone to fill it - they can have as many or as few accounts as needed at any time. The simple fact that they can convince people to sign the contract by offering no other options doesn't justify a charge that doesn't represent any real cost for them. They want me to believe it is as costly to terminate my account as it is to serve me for two months?
    • r3zonance, on 10/11/2007, -3/+2Exactly, in the UK you have to buy-out the rest of the contract.

      Stop whining you pathetic individuals.
      • cliffr39, on 10/11/2007, -0/+0and buying out the remainder of a contract could be MUCH LESS than a termination fee in many cases. So that is not the same.

        example: I have 2 months left on a $40 rate plan. = $80 to break in UK, still 175-240 in US depending on the carrier. And they won't let you just pay the normal rate plan in advance and still cut off service now.
  • MrJohnson, on 10/11/2007, -1/+11Telecommunication companies are utilities, we're just in denial about it.
  • JJCDAD, on 10/11/2007, -2/+7You all do know that you can use the iPhone on AT&T without a contract right?

    http://arstechnica.com/reviews/hardware/iphone-review.ars
  • iName, on 10/11/2007, -3/+7No different than the price to break contract on any device. Shouldn't "lawmakers" get pissed about that?
  • kittynipples, on 10/11/2007, -7/+9So, you willingly sign a contract, and then complain because your have to pay a penalty to get out of it. Boo hoo.
    • bemenaker, on 10/11/2007, -2/+1The question you should be asking is, how fair are these contracts, because they aren't.
    • LoudNoise, on 10/11/2007, -1/+2When were you FORCED to sign the contract? Oh, that's right, you weren't.
      • cliffr39, on 10/11/2007, -1/+0it's not a matter of being forced or not. the Carriers (ALL OF THEM) have justified their use of ETF's due to the subsidizing of handsets. Now they are not on this but still wish to keep that option. That is what people are saying.
  • HerrEisenheim, on 10/11/2007, -7/+0Anyone know who's paying for YouTube on the iPhone? AT&T or Apple?
  • TherealObadiah, on 10/11/2007, -15/+4More liberal nanny staters once again trying desperately to save us from ourselves. Yeah, get the government involved with my iPhone...yeah, that'll help.
  • Mockylock, on 10/11/2007, -5/+5All these rich lawmakers are deciding to get together on tons of different iPhone deficiencies, but haven't got anything better to do. The service cancellations happen with direct TV, Dish network and any other contract that people get into... but all of a sudden, people buy a $600 phone and don't expect a consequence?
    Once again, we see who has the power to complain and make laws in this country.. the group who can actually afford to buy an expensive cell phone, congregate and whine about it.
    • dethl, on 10/11/2007, -0/+2If the iPhone were subsidized by AT&T your argument would be valid.

      Yes, DirecTV and Dishnet both charge ETFs - except that shiny new HD-DVR you got was probably damn cheap or free. They need to make their money back somehow and a contract will help them. If you want out of your service you pay a prorated early termination fee and you're free. People who bought the iPhone payed the FULL price - not a subsidized price. AT&T is making pure profit from this - there is no subsidy to overcome with iPhone customers - iPhone customers should be allowed to cancel their contract ETF free whenever they feel like it.
      • locojones, on 10/11/2007, -0/+1Insisting that ETFs are related to subisidies doesn't make it any more true. It's not. If it were, than you would expect an ETF to vary based on the subsidy given on a phone, and it doesn't. It's a liquidated damages penalty that you agree, up front, to pay if you choose to breach your contract. You people fail to forget that, irrespective of the phone, you're entering a legally binding promise to pay for 24 months of service. Actively choosing not to fulfill that promise comes with consequences, in this case an ETF. You're in fact lucky that they even give you a way to terminate your contract early, because the alternative is saying, "Nope, we're not going to let you terminate early. You pay, or we sue you for breach.' You want to bitch, wait until you're in a breach of contract suit looking at paying attorney's fees and court costs.
  • bellachainsaw, on 10/11/2007, -8/+4i really think it's rediculous for people to complain this much about the contract. especially if you signed up for it, knowing about it. i also think it's stupid for the government to try to get in on anything with these wireless carriers- i think it's way obvious that they are either looking for a piece of the financial pie or just some good old fashioned control.

    besides, there have been cancellation fees way before the iPhone was even created. just look at verizon- their cancellation fee is $175 as well.and that's usually accomodated with a ***** cell phone. it's sad that it takes an invention like the iPhone to bring cancellation fees and the financial rape to light. if you signed up for the contract, deal with it. no one feels sorry for you. it's just a ***** phone. find something useful to complain about- like our country's current status. put your bitching to good use.
    • fanclerks, on 10/11/2007, -3/+1You're missing the point entirely. The main reason there is normally a cancellation fee is so the company can recoup the cost of subsidizing a phone for you to use. How else do you think they're able to have those "free phone with 2 year contract" deals? The thing with the iPhone is that it's not subsidized. You pay full retail for that sucker. There shouldn't be any cancellation fee, plain and simple.
      • geminitojanus, on 10/11/2007, -1/+3The point of the Contract Termination Fee is to pay for the fact you didn't live up to your end of the contract, not to pay for any subsidized equipment (that you may end up having to pay for anyways, depending on the company). If you actually read the phone contract before you signed it, you would realize this.
        • AxeSwinger, on 10/11/2007, -0/+1I don't know of a company out there that would enter into the type on "contracts" that most companies write for consumers. If a company does enter into a locked period of time with a service provider there usually are Service Level Agreements that stipulate the provider will maintain a level of service and if they don't they pay a fine or you can walk away from the service.
          The you have to understand is that these are not contracts, these are Terms and Conditions. A contract implies a certain amount of negotiations, try to negotiate the next time you get a new phone.
  • hammradio, on 10/11/2007, -2/+5Why are they all of a sudden concerned about the AT&T/iPhone Termination Fee... when every service has a high termination fee. Sprint's is $150. The Term fee is usually the same as the "rebate" you get for a new phone typically. So your next free phone you pay for when you leave. Thanks for waking up Congress.
    • chukd, on 10/11/2007, -0/+1They used a hot item to illustrate their point. The whole thing isn't about the Iphone and its cancellation fee, it is about all the cell phone companies.
  • slapthemonkey, on 10/11/2007, -6/+1I agree with Ogre73
  • jsmith39, on 10/11/2007, -3/+1Yeah, let's get the government involved. That will naturally lead to increased competition and better variety for all. It's so great living in a country where our government cares more about the wellbeing of it's citizens than corporations.
  • dmbchris, on 10/11/2007, -1/+2All it takes to get lawmakers going on legislation is to make a phone that they actually want. Remember how quickly RIM got help from congress, when they discovered their favorite device may stop working? This is the same thing- they all want a cool iPhone without restrictions just like the rest of us, only they're actually in a position to do something about it.
  • nightstrm, on 10/11/2007, -0/+3As stated above, why is the iPhone being signaled out in this instance?

    If Apple let the phone go to any carrier, people would start complaining that features that require hardware on the carrier's network to function (i.e. visual voicemail) wasn't working.
    • 3adkied, on 10/11/2007, -1/+2If you read the article, the iPhone isn't being singled out, it's being used as an example. The whole point of an example is that it is familiar to people and easily represents the whole group without being too abstract. It is the phone being chosen as an example because it is high profile right now, and it is not subsidized by the carrier.
      To your second point of complaining about loss of features - if I switch companies, there will be a reason I'm happy to leave that out-weighs a loss of some feature.
    • steamedlice, on 10/11/2007, -0/+1Singled. Not signaled. Good lord.
  • nockee, on 10/11/2007, -3/+4Can't believe so many diggers side with the telecom oligopoly. Sure people signed a "contract", but anybody who has needed wireless service has never had a choice. Its time to fight these insane cancellation fees. Consumers have no choice today. If it takes the iPhone success to bring attention to the sick fees these predatory companies charge, so be it.
    • gatorfreak, on 10/11/2007, -2/+3Consumers have no choice? How about exercising the choice to not spend any money?
      • fritzbrown, on 10/11/2007, -1/+3Amen brother, consumers are screwing themselves by agreeing to pay for crappy services and agreements.
    • AxeSwinger, on 10/11/2007, -0/+1Thats not entirely true. If you buy a phone at full rate you don't sign a contract. After my first contract I've only bought phones from ebay and I've not been under contract.
    • eddieroger, on 10/11/2007, -0/+2Is that really a choice? Do you think that five people never signing up for wireless service will send a message? Do you think that the entire world will all of a sudden stop using something, and that'll show 'em? Please - the objection through abstention doesn't work for oligopolies or monopolies.
  • PacketScan, on 10/11/2007, -3/+5obviously they have been thinking about this for a while.. And this latest Pilfer.. These companies have been raping the average Joe for years..
    Why should someone or I should pay a termination fee when i paid full price for the phone.. When the contracts were structured previously the price of the phone was discounted because they would make up the difference during the contract..

    Now it's just 100% profit... Anyone smell that????
  • jsayreallen, on 10/11/2007, -0/+3AT&T's Blackberry Connect is $30 a month and their PDA Connect is $45 a month (for treo's and windows mobile smartphones), so in essense $20 a month for the iPhone plan is a $10-$25 a month subsidy - or $240-$600 over the 2 year contract. Not bad in my book.
    • AxeSwinger, on 10/11/2007, -0/+1I'm paying $21/month for my blackberry with unlimitied data transfer not sure where your getting your numbers from.
    • locojones, on 10/11/2007, -0/+2You're an idiot. You think you're getting a subsidy because you get an iPlan? Let me break it down for your simple Apple brain:

      Voice - 450 minutes. AT&T NORMALLY charges anyone 39.99 for this plan.
      Data - Unlimited MediaMax200, which is MediaNet w/ 200 texts. AT&T NORMALLY CHARGES anyone who wants this 19.99.

      Look what happens. We magically combine them, slap an iPlan name on it, and charge.....wait for it....39.99+19.99 = 59.99!

      Yeah quite a subsidy. You get what everyone freaking else at AT&T gets for the same price!
  • AbeVigoda, on 10/11/2007, -2/+4T-Mobile's early termination fee is $200 and has been for quite some time. No one's bitchin' about that.
    • elmwood, on 10/11/2007, -0/+2.... EVERYONE with T-Mobile bitches about that fee. My contract is up in a month, and they still want to charge me with it to cancel? ***** them.
      • AxeSwinger, on 10/11/2007, -0/+2Depending on your state they have to prorate the termination fee. I know they have to in California
    • OrangeTide, on 10/11/2007, -0/+2Sprints termination fee was $250 last time I dealt with them. And many of these companies (Spring included) have this automatic contract renewal system which seems totally illegal.

      I would highly recommend you do not set up automatic payments using a checking account with these companies. I did that once and I it was almost impossible to get them to stop billing me for their made up fees. Credit card is the way to go with these guys. plus when your CC is ready to expire it's easier to try and cancel your service. They won't really talk to you about the charges until they have a problem automatically charging you without your permission and will actively contact you about it.
  • Langford, on 10/11/2007, -1/+6I'm having trouble deciding if I should feel sorry for anyone. The cost of the device is a ripoff and contracts are exclusive, so shame on Apple. The cost of termination is a ripoff and the contract is scandalously crooked, so shame on AT&T. AT&T is nearly a monopoly again and they are somehow allowed to get away with this kind of contract, so shame on the government. Consumers knew it was a rip from the start were warned and still agreed to it, so shame on the consumers. It would be really easy to just pick the group I like best, and support them as the victims, but I can't help but think that none of them really deserve much sympathy here. If there is anyone to feel sorry for, it's the people who would have liked to get the device, but are thankfully patient enough to wait for better circumstances before they get it.
  • jcastillo81, on 10/11/2007, -2/+1Sounds like some whiners are upset cause they didn't read the contract fully. How bout instead of running to mommy gov't you grow up and learn to read. If you don't like the contract, don't sign. It's pretty simple.
    • nondescrypt, on 10/11/2007, -0/+1Great point jcastillo81 !! & i guess if all 3 wireless companies have such contracts then maybe you can just connect 2 glasses via a long string & then you don't have to deal with predatory monopolies. wow, it IS pretty simple, isn't it. you so smart guy !!!! mommy governmnet, what a joke, everyone knows the market will sort it all out, look at Africa 40 years later, the market sorted them out?? right?>?
  • gquaglia, on 10/11/2007, -2/+3The whole ETF thing is complete *****. At first they used since the carrier subsidized your phone, but in the case of the iphone, you are paying full price so why does an ETF even come into play. What's next, 4 and 5 year contracts, life time contracts. Stop the madness.
  • iName, on 10/11/2007, -2/+0Citizens upset by mobile phone termination fees = no response from the industry. Let's see what, if anything, happens now.
  • pixeldust, on 10/11/2007, -4/+2What use is a contract if there is no reason to abide by it's terms? If you don't like the contract don't ***** buy an iphone, it's really not that difficult.
    • nondescrypt, on 10/11/2007, -1/+2Ya & if you don't like Terrorism then don't build a *****' bomb & STFU !!! isn't it JUST THAT SIMPLE ! (sarcasm)
  • bravo369, on 10/11/2007, -3/+3I think all industries should be regulated in these types of fees whether it's cell phones, banks, cable. They should be made to justify why a termination fee is $200 or for banks, an overdraft fee of $40 if you only go over by $1. why do we even need contracts and termination fees anyway? whatever happened to providing good service and people will pay?
    • AxeSwinger, on 10/11/2007, -0/+3We stopped being customers and because consumers in their eyes. We got turned into a commodity.
    • nondescrypt, on 10/11/2007, -0/+3i agree that all industries should be regulated, i don't know anything about good service but i do know that the people are p a y i n g
      seriously tho, people need to be protected from the runaway greed that is sooo celebrated around here.
  • jinjin, on 10/11/2007, -2/+6Well at least Congress is tackling the hard-hitting, important issues.
  • TedLW30101, on 10/11/2007, -1/+5Everyone complaining about these fees (included in the contracts that are being signed) don't seem to understand the free-market concept.

    If you don't like the fees, don't sign. If everyone does that then the provider/manufacturer has a ton of unsold product which means they adjust their practices to get it to sell.

    Guess what? You want an iPhone. It's a specific brand. There are other cell phones/PDAs out there. Buy those until iPhone/ATT adjust to what the market will support. The reason companies can charge these prices are simply because consumers will pay.

    If people want to play 'keeping up with the Jones' by getting the latest status symbol then you have to pay. Don't whine when it turns out to be crap.

    Lamborghinis are cars, so are Mercedes, Lexus, Acuras, Hondas, Hyundais and Fords. Get what you can afford and be happy with.
    • AxeSwinger, on 10/11/2007, -0/+2I don't think you understand the free-market concept. There is no competition in this market, it's controlled by three major players. The collude their pricing schemes, as evidence I point to the recent price increases of Text messaging the four largest providers (the smallest of the four leases a majority of it's capacity from the second largest) all increased their prices to .15 with in six months of each other. It's not because of costs because TM cost virtually nothing in infrastructure cost and use significantly less bandwidth than voice calls.

      So before you start talking about free markets understand what exactly makes a free market.

      I'll give you that the iPhone is mostly about conspicuous consumption (I don't own one) it's a great example of whats going wrong in the cell industry with the media hype the launch received it's garnered the attention of lawmakers.
      • prashanthsharma, on 10/11/2007, -1/+0Well said. No one is holding a gun to anyone's head to buy an iPhone. Its not too expensive for the people who are willing to pay the $600, and apparently ther eare over a million of them. If its too much for u then dont buy it. Wait a few months it will come down in price.

        The only aspect I have a problem with and think should be regulated is that even after u pay the ETF the device is locked and unusable. After paying the ETF you have essentially fulfilled your contract obligations and should be allowed to do as you please with the device. Not being able to use it anywhere else, or for that matter as a simple iPod ought to be illegal.
  • msteinblock, on 10/11/2007, -1/+0Why is our government even involved?? I did not get the iphone because I am not going to get into a contract for two years. I am not going to pay that much for a phone. And I am not going to pay for a termination fee. Simple, anyone that does not want to do that DONT. When Apple and ATT do not sell any phones or plans, I guess they will change their ways. Simple really. Why does our government need to hold our hands....
  • lornefs, on 10/11/2007, -2/+2The fact is that you are paying $600 min. for the phone and then whatever AT&T wants for 2 years (actually 5 years).
    The cancellation fee is meaningless because if you cancel then you no longer have a phone.
    I don't even blame AT&T for this, this is all on Steve Jobs, he should have known better.
    In my opinion Apple has just royally screwed their entire user base (I assume the only people who bought this thing are Apple worshippers.)
    It's too bad because it really looks like a cool device, I'm looking forward to the next iPod.
    • beatusmongous, on 10/11/2007, -0/+0Who's forcing you to keep the phone if you end the contract? No one is stopping you from selling (or giving) it to someone who can use it (i.e. me). I don't understand the argument, really. People are all upset about the fact that the iPhone only works on AT&T network. Guess what!? the Chocolat only works on Verizon, and can NEVER be brought to a GSM network. My W600i will NEVER work on anything but GSM, so it will NEVER be on Verizon's or Sprint's network. So then, what happens to my phone if I leave AT&T and switch to Verizon? I can either sell it, or give it to someone who can use it. Why would I keep it? I wouldn't have any use for it. To me, the argument is like buying a gas clothes dryer, and then moving to a home that only has an electric source. Why would I then hang on the the dryer? Wouldn't it make sense that I sell it or get rid of it? Gosh, I'd have a lot of junk in my garage if that were the case...

      As far as the ETFs, if you don't want them, you have three choices: Don't get a phone (any phone is capable of ETFs as it's the provider's issue, not the phone), get a Pay as you Go plan, or stay with the company until the contract expires. Again, I don't understand the complaint. Just deal with it. You signed, you figure it out. Basically, the ETF is the provider's way of making sure they have revenue for 2 years. It's the same as buying a car. If you finance a car, and you want to get out of the contract early, you have to pay it off. Sometimes, you even have to pay an early buyout penalty. We know that going in, so what's the big deal? At least the phone company doesn't make you pay the full 2 years up front. If so, the ETF for a $50 per month contract would be $1,200 - ($50m) with "m" being the amount of months you have been with them. Man, stop whining about a measly $175. It could be worse!

      And the $500 and $600 price of the iPhone IS NOT THE FULL PRICE!! That is the price WITH a 2 year contract! The minimum price is $500 ($499). So, the iPhone will only work with AT&T for the next 5 years. If you have one, and you don't want it anymore, then sell it and try to get some of your money back. It's as simple as that.

      The writer of this article is biased and is misleading the masses. Wake up, everyone!
  • nondescrypt, on 10/11/2007, -4/+2Thanks be to Allah for the open source neo1973, the iphone is a rip-off & a cripple at the same time. thanks but no thanks a(t&t)(pple) !
  • spooniep, on 10/11/2007, -0/+7Give me a break. What I don't get is that even though U.S. mobile phone companies lock virtually every one of their phones to their networks and charge early termination fees, people are just now starting to bitch and moan about it now that the iPhone is out.

    This isn't the iPhone's problem. It's a bigger issue with the way that the whole mobile phone business is a giant racket that's built around the "razor/razorblade" model. It's just that someone finally figured out that if the "razor" is nice enough that people might pay for it too.
  • egb116, on 10/11/2007, -0/+0It's not an iPhone termination fee, it's an AT&T termination fee... the same one that applied when I had the crummy little Samsung phone that I got for free, and the same one that applied to my Blackjack. Yet another story that spins the facts in its favor. Why should iPhone users be exempt from a termination fee just because their device is expensive? Why is no one up in arms about the Treo 750 that retails at a hefty $549 and doesn't transfer to a CDMA service?
  • huntrm, on 10/11/2007, -1/+4Here's a fact: Contracts are put in place by cellphone carriers to offset the subsidy of a phone (e.g., the phone costs $199, they sell it to you for $49). In addition, they obviously want your business for 2-years. But main point of a contract is to minimize risk on a phone subsidy. The odd thing is that the iPhone has no subsidy - typically one can buy an AT&T phone for the full price (with no contract), or buy it for less with a 1-year ($99) or 2-year contract (free).

    Termination fee should apply in the event that the phone was subsidizied. In this case, though, people are paying for a phone with ZERO subsidy and also signing a 2-YEAR agreement (idiots). I guess if you gotta have it, then you gotta have it. Having been in the cell-phone business for 10-years, I'm astonished that people don't see this idiocy.

    I for one would love to get an iPhone, but there's no way I'd do a 2-year contact since 1) The phone can't be insured - what do I do for a replacement? e.g., pay $49 for a new phone and extend my contract out for another 1-2 years?? 2) The phone isn't being subsidized, which if I sacrifice two years, I should get the phone below cost.

    The real way to get this phone is 1) do it on prepaid per ArsTechnia article (bit more, but worth it) or 2) if you are an existing AT&T customer, get the phone, but somehow find a way to activate it on your current post-paid phone without adding 2-years to your contract (I think ArsTechnica explains this one also, but sounds bit more difficult).
    • AxeSwinger, on 10/11/2007, -0/+2I think you hit the nail on the head regarding insurance. My ipod takes significantly less damage than my mobile (it's just a matter of how much I use my phone) and without the insurance your pretty much screwed should it fall in a toliet (yep), dropped from a counter (yep), or lost it (yep, again). It's really a bad deal for customers, even with the sexy phone, and a great one for Att and Apple.
  • zioxide, on 10/11/2007, -1/+4If you don't like the terms of the contract (early-termination fee being one of them), then don't sign it. It's that simple. AT&T can charge whatever they damn well please for early termination, etc. If you don't want to pay this, don't sign the contract.
  • Tomson74, on 10/11/2007, -0/+1*shakes head* I find it very interesting that when the iPhone was coming out. People of this site RAVED it. Loved it. Had no problems that AT&T was the carrier. Now, all I see on here, is people bashing the iPhone and AT&T. That being said, I do agree with that fact that it took congress a damn over priced, over hyped phone to get involved. How many of you want to bet that the congressmen who are complaining are the ones who bought the phone LMAO
  • Vermifax, on 10/11/2007, -0/+1THIS, of all things, is upsetting Congress....!?
  • beatusmongous, on 10/11/2007, -0/+0There are so many more important issues, and we spend all our time on this? It's not even a real issue. I mean, we've known all along that cell phones are made to work with one carrier. A Cingular RAZR must be replaced by a Verizon RAZR if one decides to switch. We all know that. One must pay a fee in order to break a contract with a provider. We know that, too. The article doesn't point out anything we didn't know. What it does do is mislead everyone who reads it and causes us to think poorly about the product, provider and manufacturer. This is called sensationalism, and most of you have fallen into the trap. The story is only a fluff story and carries no weight whatsoever. It just uses words that strike your emotions. We've dealt with things like this for hundreds of years. If you buy a house and your couch doesn't quite fit, get rid of the couch and get a new one. If you move and your gas dryer doesn't work because you now have an electric socket, get rid of it and buy a new one. If you move out of the country and your appliances won't work because of the new electrical connections and voltage, get rid of them and buy new ones. Same goes with this instance. If you change providers and your phone doesn't work, get rid of it and buy a new one. We do it all the time. Why should we suddenly freak out now? Oh, I know! It's because someone wrote an article about it and used some tasty words! Makes me thing of the line, "Don't wanna be an American Idiot!" Great example we are to the rest of the world when we freak out over something as dumb as this.
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