Court Makes Sprint Pay $73 Million Early Termination Fee

from the see-how-that-feels? dept

You know that awful feeling you get when your mobile operator tells you there's a huge "early termination fee" for canceling your contract early? Yeah, that's probably about how Sprint executives feel now that Sprint may need to pay $73 million for its ETFs. A closer look at the details shows that it really would just be refunding $18.25 million and then reversing charges on another $54.75 million in ETFs that hadn't been paid. People absolutely hate ETFs, and even Sprint acknowledged this last year when it noted that its eventual WiMAX network won't have ETFs.

However, there is a reason why such ETFs exist: it's basically to recoup the subsidy that mobile operators pay to give you your super cheap mobile phones. And, those ETFs were in the contracts offered to customers, so it's difficult to see why such things are really a problem. The actual ruling sheds some light on this, as it notes that in 80% of the ETFs, it was actually Sprint terminating the contract and then still charging the ETF -- which, as the ruling points out, is basically Sprint trying to get "liquidated damages." Then, the problem is that it does so in violation of a specific California law that requires a more accurate calculation of liquidated damages, beyond "the ETF is $200 no matter what." So, this isn't the end of ETFs by any means, but might mean that they need to be a bit more fair going forward.

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  1. identicon
    My 2 cents, 29 Jul 2008 @ 8:07pm

    ETFs do suck, especially if the provider sucks, so you get a phone and find out your service is crap, and have to pay extra, just to get out.

    There must be a better business model for $ell phone companies, maybe, they sell the phone to you at cost, in turn you agree to x amount of service, with maybe a small (much less then 200$) deposit if you quit early, and the longer you're a customer, the cheaper the ETF gets.

    I agree these phones aren't that expensive, they are marked up 300-400%(if not more) to make you think you're getting a deal.

    With cell phone quickly replacing home phones, you'd think these companies would be re-thinking things.

    If a company has good service and fair prices, they shouldn't have to worry about people living, unless they are moving out of area or money troubles (which if its money problems, they aren't gonna get the ETF any way, at least any time soon... hmmm eat or pay ETF).

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