Don't get me wrong: I'm no fan of mobile phone early termination fees - but I understand why they're in place. In a nutshell, the wireless carriers are able to sell expensive smartphones at affordable prices because they are subsidized. If you bail out on the contract early, the carrier loses money - and, of course, they are not in business to lose money.
Today, Senator Amy Klobucher (D-Minn) introduced a bill that would set limits on these fees, according to a post on the Hillicon Valley blog. Kolbucher, along with Sens Russ Feingold (D-Wis.), Jim Webb (D-Va.) and Mark Begich (D-Alaska), called the fees "budget busters" and said they are unfair to consumers.
The controversy sparked after Verizon Wireless said it planned to double the early termination fee to $350 on some smartphones. Shortly after, the Minnesota Senator sent letters to Verizon executives and the FCC, calling the move "anti-consumer and anti-competitive." She said the move was proof that the wireless industry is incapable of policing itself and making its practices more competitive and consumer-friendly.
But Verizon Wireless disagrees and is quick to point out that consumers don't have to subject themselves to these fees. Instead, they can choose to not sign a contract and pay full retail price for the phone itself, which of course is usually significantly higher than the cost of the subsidized phone and the early termination fee combined. Customers can also choose to sign a one-year contract and pay a price somewhere between the two-year-contract price and the full retail price.
I never said they were good options. But there are options.
Here's the thing, though. I've been reading some posts on this subject as well as some reader feedback and I'm getting this sense that some consumers feel that they have some sort of God-given right to a low-cost, full-feature smartphone that offers unlimited Web access, texting, tethering, video and more on a powerful 3G network.
As much as I'd love something like that, I also know that a feature-rich smartphone is a luxury, one that I can either afford or not. If I want an iPhone, I'm going to have to pay - not only for the device but also the rates that AT&T sets. Same goes for Verizon and Droid, Sprint and the Pre and so on. This stuff does not come cheap.
With that said, I think the idea of early termination fees needs some tweaking and revisiting. I hate the idea of Verizon's fee hike for early terminations of smartphones, though I do appreciate the fees being reduced for every month of service - that's the way it should be.
While there needs to be a better way, I suspect that government's heavy hand is not the solution.