AT&T to raise two-year termination fee by 86% on iPhones, smartphones

In a cautiously worded notice to customers this afternoon, AT&T advised that it will be raising its early termination fee (ETF) for wireless service for smartphones and netbooks, evidently including Apple's iPhone. Beginning June 1, the base rate for ETFs from two-year service agreements will be raised from $175 minus $5 per month of tenure, to $325 minus $10 per month.

"One of the ways we do this is to offer you the industry's leading wireless handsets below their full retail price when you sign a two-year service agreement," reads AT&T's notice. "In the event you wish to cancel service before your two-year agreement expires, you agree to pay a prorated early termination fee (ETF) as an alternative way to complete your agreement."

To help balance out the revenue stream, the ETF for basic phone and feature phone users will decrease after June 1 by $25, the company said, to $150 minus $4 per month of tenure.

AT&T made its last adjustment to early termination fees on May 25, 2008, when it first adopted the "pro-rated" approach in what was seen at the time as response to pressure from Congress. A bill had been introduced before the floor -- the Cell Phone Consumer Empowerment Act of 2007 -- that would mandate pro-rating for ETFs, and possibly institute caps as well. The benchmark for ETFs that the bill's author, Sen. Amy Klobuchar (D - Minn.), had set as being too high for most smartphone customers was $175. Soon after AT&T set its newly pro-rated fee to $175 and other carriers followed suit, action on the bill subsided, and it was never passed.

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