Here's why cell-like early termination fees will come to VoIP
Mark my words. At some point in the non-distant future, when the novelty of VoIP wears off, many if not most VoIP service providers are going to experiment with pricey termination fees similar to what the cell companies do.
I'm not talking about a termination fee equal to one month of service. I am talking about huge amounts, often above $200. Some divorces can be finalized for less.
That's not only because some of the same companies that offer cell service offer VoIP. It's because fee income is part of the very nature of service provider financial models. If they can get away with these fees, and the fees prove effective, they will.
In fact, a brand new study just released this week by the U.S. Public Interest Research Group confirms this. Entitled "Locked In A Cell: How Early Termination Fees Hurt Consumers," the study canvassed 1,000 U.S. consumers.
Some 36% of the respondents replied that the high termination fees (as high as $240 in some cases) prevented them from switching cell carriers.
In fact, 47% of respondents said they would "switch cell phone companies as soon as possible" or consider switching cell phone companies" if these fees were eliminated.
But the point is these hefty early termination fees do work. To some consumers dissatisfied with their current provider, it must seem incredibly confining. Escape, and better service, costs a fortune.
The cell industry also knows these fees work. They are so wedded to the concept they have petitioned the FCC to define early termination fees as "rates" rather than penalties. This might well preempt level challenges to the fees at the state level.
Given that some state regulators and judges might be more consumer-friendly than their Federal counterparts, the reason for this petition is obvious to me.
If this petition is granted, you can bet the VoIP service providers can be next. And I can assure you they are going to hide these termination fees in tiny print, dwarfed in size by come-on ad copy and "Specials" that are special only to stockholders.