Thursday, July 31, 2008


California judge rules early cell phone termination fees illegal

My first thought was, hey, cool! Then I read the article...not so cool.

From the article-

In one of the most significant legal rulings in the tech industry this year, a Superior Court judge in California has ruled that the practice of charging consumers a fee for ending their cell phone contract early is illegal and violates state law.

I'd like to know what part of California law saws that if you enter into a contract you don't have to pay the penalty for breaking it. Do they do the same for people who want to take their money out of CDs early too?

I'm all about state's rights, and if this is how Cali wants to run things, well, then, I guess that's their business. Unfortunately (like much that they do), it's going to affect ALL of us in the end.

While an appeal is inevitable, the ruling could have massive fallout throughout the industry. Without the threat of levying early termination fees, the cellular carriers lose the power that's enabled them to lock customers into contracts for multiple years at a time. And while those contracts can be heinously long, they also let the carriers offer cell phone hardware at reduced (subsidized) prices. AT&T's two-year contract is the only reason the iPhone 3G costs $199. If subsidies vanish, what happens to hardware lock-in? Could an era of expensive, but unlocked, hardware be just around the corner? It's highly probable.

The FCC is likely to get involved in this matter, and THAT'S just going to make things worse.

Do I LIKE that California law is whacked and putting us all in this pickle? No.
Do I want to Federal Government getting it's hands in this mess? Hell no!

From here this looks like a lose, lose situation.

Guess I better start saving for my next cell phone NOW! ;)



At August 06, 2008 7:26 PM, Blogger Alicia said...

My first reaction when I saw your post was that California could do what it chose to do...but then I read the article. The thing that confuses me is, why? Why is any contract stipulation illegal? I mean, I guess we all get into debates regarding what constitutes discrimination, and what are unfair aspects of contracts (like, I think it's okay to require credit card companies not to *change* their rates without warning), but early termination cell phone fees don't fall into either of those categories. Like the article said, it's just a stipulation that allows phone companies to give customers their phones for free (in my case) or a reduced price, because they know those phones will be used for the life of the contract. Yeah, I don't get it...


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