AT&T lifts iPhone and smartphone early break fees

Stephen Withers
Sunday, 23 May 2010 03:59

Your IT - Mobility

AT&T has increased the early termination fee applied to smartphone and netbook customers that don't let their 24-month contracts run their course.

AT&T is set to vary its early termination fees in an attempt to more closely align the charges with the loss the company suffers when customers break their agreements.

The heart of the problem is the industry's (and seemingly its customers') love affair with subsidised phones. You don't get something for nothing, and carriers expect to recoup the subsidy over the term of the contract.

Break the contract early, and someone's going to be out of pocket - and the telcos don't want it to be them.

From June 1, AT&T will increase the early termination fee for smartphones, netbooks and other relatively sophisticated devices from $US175 to $US325, while cutting the fee for basic phones from $US175 to $US150. The idea is to bring the fees more closely into line with the damage suffered by the company.

For example, AT&T sells the iPhone 3GS for $US199 on a two-year contract. Australians can buy the same phone from Apple outright (ie, unlocked and without a contract with a phone company) for $A879 (approx $US665 before taxes). So it seems that the new AT&T fee is in the right ballpark.

But has the fee on simple phones been reduced enough? Please read on.