Judge Rules Cell Phone Early Termination Fees are Illegal


Owning a cell phone involves not only the monthly plan fee but “other” fees as well. If you have a $39.99 Roll Over plan with AT&T, you also get other charges such as “Regulatory Cost Recovery Charge” which adds up your monthly fee to almost $50.00. If you want to end your cell phone service prematurely, you will be charge an “Early Termination Fee”. Some fee can go up as high as $200.

The termination fee gives cell phone companies the power to lock you into a long term contract and they allow all these charges to be put on your bill knowing that if you cancel you will be charge even a greater fee.

Now, the tide might be turning to the customers’ side. If you live in California, you might no longer have to pay an early termination fee if you had prematurely ended your cell phone plan with Sprint Nextel. A judge in the state of California have ruled that charging customers a fee for ending their cell phone plan early is illegal and violates the state law.

This judgment pass down by Alameda County Superior Court Judge Bonnie Sabraw said Sprint Nextel can no longer collect $54.7 million from California customers who have canceled their contracts but did not pay the termination fee. Sprint Nextel must also pay customers $18.2 million in reimbursements as part of a class-action lawsuit challenging early termination fees.

An appeal from Sprint Nextel is most likely.

This judgment might not be passed if higher court rules that the jurisdiction over telecommunication companies falls under the authority of the federal government because federal laws supersede state laws. The FCC is more tolerant of these fees but is looking to proposed a plan whereby the early termination fee decreased as you get closer to the end of your contract.

Currently, there are other class-action lawsuits challenging early termination fees in other states as well. If this judgment against the Sprint Nextel is upheld then the repercussion throughout the industry will be massive and might influence the outcome of these other class-action lawsuits as well. Eventually, early termination fee might be a thing of the past.

Advantage and Disadvantage of Long Term Contract
Without the threat of early termination fees, cell phone companies lose the power to lock customers into multiple year contract. One advantage of the contracts is that they enable customers to purchase phones and other accessories at a discount and at times even for free. If customers can cancel their plan at anytime, then we might see higher fees for cell phones and other related accessories. We might even have unlocked phones giving us the ability to use the same phone for different cellular companies.

Having lost the power to charge customers early termination fee, cell phone company might look for other ways to reclassify this fee and pass it on to the customers because early termination fee provide all cell phone companies a good source of income.

If the ruling describe above is passed and upheld by the higher court, then early termination fees might be a thing of the past.

July 31, 2008 | Filed Under Ramblings | 2 Comments 

Yao Ming and LeBron James Olympic Coke commercial

I am a big fan of basketball and have been following the 2007 - 2008 NBA season. I had seen almost all of the games involving the Boston Celtics (yes, I am a big fan of the Celtics) through the NBA TV and the Internet. The final outcome of the season was that the Celtics won the NBA Championship (YES, finally after almost 20 years of not winning).

I was at the Yahoo sports checking out the latest news in NBA and came upon an article with an interesting video involving LeBron James (Cleveland Cavaliers) and Yao Ming (Huston Rockets) in a Coke commerical.

The video shows Yao Ming along with a fire-breathing dragon and three kung-fu pandas (these pandas have no relationship with Po in the movie “Kung-Fu Pandas”) fights LeBron James along with a lasso throwing cawboy and 3 mean looking bears. The winner of the fight gets . . . . . a Coke.



Check out LeBron James fights Yao Ming for a bottle of Coca Cola:

July 22, 2008 | Filed Under Ramblings | 3 Comments 

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