[kictanet] FW: Early cell phone termination fees illegal

[Edith Adera]

What is the rule in Kenya? Celtel (read Zain) – seems to have this rule as
well?

 

What’s in place here to protect consumers?

 

Edith Adera

 

 

 

  _____  

From: Gideon Christian [mailto:gchristian at idrc.ca] 
Sent: 01 August 2008 16:39
To: ICT4D-Futures Workspace
Subject: Early cell phone termination fees illegal

 


California judge rules early cell phone termination fees illegal


http://tech.yahoo.com/blogs/null/99655

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
<http://www.mercurynews.com/ci_10039461?source=most_viewed>  consumers a fee
for ending their cell phone contract early is illegal and violates state
law.

The preliminary, tentative judgment orders Sprint Nextel to pay customers
$18.2 million in reimbursements and, more importantly, orders Sprint to stop
trying to collect another $54.7 million from California customers (some 2
million customers total) who have canceled their contracts but refused or
failed to pay the termination fee.

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.

Of course, the carriers aren't going to take this lying down. Early
termination fees are seen as critical to business, so carriers are expected
to look for ways to reclassify the fees (such as by calling them "rates,"
part of the arcane set of laws that covers the telecommunications industry).
The industry is also pushing for the federal government to step in and claim
oversight over the early termination fee issue, which would invalidate any
state ruling. The FCC is generally more tolerant of such fees, though
Chairman Kevin Martin has proposed a plan whereby the fees are decreased the
closer you are to the end of your contract.

The FCC may also buy the argument that, since carriers are nationally based
(and consumers can use their phones anywhere in the country), that a single
policy should apply across the nation, rather than creating a patchwork of
legislation that could lead to confusion and chaos caused by having 50
different policies.

Is the early termination fee dead? Not yet, but it's looking a little
haggard.

 

 

Gideon Christian, LL.M                            
Research Intern/Stagiaire                          
Int`l Development Research Centre (IDRC)         
Centre de Recherches pour le Développement International (CRDI)            
150 Kent Str Ottawa, ON, K1P 0B2 Canada       
Tel/Tél:+1-613-236-6163 ext 2063              
Cell:cellulaire: +1-613-265-1300                  
Fax/Téléc: +1-613-238-7230                       
Email/Courriel: gchristian at idrc.ca           
www.idrc.ca / www.crdi.ca 

 

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