AT&T starts pro-rating Early Termination Fees next month
Good times for new AT&T customers: starting on May 25th, the carrier will begin to prorate ETF, or Early Termination Fees by $5 each month of the contract. The deal is for folks with new or renewal plans, so if you’ve just started a contract, you’ll have to deal with cellular servitude for a bit yet, or pay the $175 flat fee to take your business elsewhere.It’s a fine line between having the freedom to leave your carrier without financial penalty or to have said carrier subsidize your equipment here in the U.S. I’m betting that there’s a few opinions on this topic, so have at it in the comments. Which do you prefer: subsidized equipment or ETFs? Or is this pro-rated method a nice “middle-ground” even though the carrier still comes out ahead ($5 x 24 months = $120 vs. the $175 ETF)?
I like it! In fact, I hope it catches on. After 23 months, you get $115 off of the ETF, or a charge of $60 for breaking contract a month early, which is far more reasonable, and will help *attract* new users.
The biggest problem with mobile services is churn. At the end of the day, few people want/need to carry more than one device for data and voice, and most people already have one. The best you can do is attract existing users to your network, and then lock them in. Lock-in doesn’t work by throwing penalties at the problem. You don’t *penalize* a user for being unhappy, you *make them happy.*
Now, a $5/month prorate doesn’t make me happy, but it means that AT&T has to try much harder to keep me happy, or else I can walk away with a minimal impact on my wallet. My reward for loyalty to AT&T is loyalty *from* AT&T.
Honestly, the fee’s even immaterial to me. I don’t have tons of money to throw about, but I was so miserable on Sprint that I broke contract to go to AT&T, and I *have* been happier ever since. The very idea that my carrier might actually want to keep me around now makes it even more appealing to stay, knowing that I don’t have much of a committment to adhere to.
(I can only imagine that it’s even better for the mobile data crowd, who try a number of carriers for their integrated radios and aircards and the like.)
So, here’s my question. I’ve had an AT&T account for 8 months, and I’d like to terminate the account. If I do it now, it’ll be $175 to terminate. If I do it on May 25th, will it be $130 since I will have had the account for 9 months by then, or will they only start taking $5 off per month after May 25th? Does that make sense?
Josh Boldman
http://www.joshboldman.com
Makes sense Josh but the new pro-rated ETF fees only apply to contracts that are new or renewed after May 25th as I read it. I suspect you’ll pay $175 if you leave your current contract at any time.