5 ms·

California judge rules early cell phone termination fees illegal

19 points by brianlash 18y ago

mechanical_fish 18y ago
This is based on CA state law, and (from the Mercury-News link in the post): Whether Sabraw's ruling will stand isn't clear. Experts say an appeal is likely, and the Federal Communications Commission is considering imposing a rule - backed by the wireless industry - which might decree that only federal authorities can regulate early termination fees. 3e-3 cheers for the FCC. Sigh.
- jrockway 18y ago
  Do FCC rules override state law? I've read a few cases involving FCC rules, and the FCC nearly always loses. If the federal government wants to restrict states' rights, they need to amend the constitution, not pass "FCC rules".
akd 18y ago
So does this mean it's time to buy a Sprint phone (or even iPhone, if the ruling applies to all carriers) in California on a long-term contract and then break it immediately? Before they change policies?
Xichekolas 18y ago
The fact that the cellular industry still has ETF policies and hardware lock-in is really sad. I mean, imagine if you had to buy your computer from your internet provider, and then it only worked with that provider. Switching from Comcast to Verizon would mean buying a new computer, and agreeing to some two year contract. The fact that the iphone would cost $399 instead of $199 is not a valid argument in favor of the ETF lock-in. I'd rather actually own my hardware, instead of what basically amounts to leasing the hardware with a modest down-payment and a hefty penalty if you try and switch carriers or end service. Just like with cars, some people may find it more advantageous to lease their hardware. Good for them, let them lease and make an ETF part of the agreement... but give us an option to 'buy the car' (or iphone).
- jedberg 18y ago
  You already have that option with pretty much every phone except the iPhone. Every carrier will let you buy the hardware at an "unsubsidized" rate, and then get a contract with a higher monthly price, but no lock in. It's just that no one does it, because it is so much more costly.
  - wmf 18y ago
    Er, if you buy an unsubsidized phone you should get a lower-priced, non-contract plan. But you probably don't, which I guess is the point.
    - BrandonM 18y ago
      I was very frustrated when I bought a Nokia N82 so that I could have an unlocked GSM phone, only to find out that the only service that works in my area is AT&T anyways. But hey, I already bought my phone, I should just be able to get a non-contract plan, especially if I'm willing to pay the full (phone-subsidizing) price each month, right? Nope. You can't get a normal monthly plan without signing up to at least a one-year contract. I even had to pay for the freaking sim card, not to speak of the activation fee. So I paid something like $500-550 for my phone, sim card, and activation fee, and I'm still in a one-year contract, all for the same monthly rate that I would be paying if I had gotten a plan that came with a free phone. Something is wrong here.
  - cameldrv 18y ago
    Simple. Buy the iphone for $200, set aside $200 for the ETF. Your iphone is now $400. If you stay put for the two years, throw yourself a party or something.
- trekker7 18y ago
  $199 instead of $399 might be a valid argument, if you were poor and just wanted a phone to talk to people and didn't care about lock-in.
  - 18y ago
maxharris 18y ago
I don't think the government should be in the business of invalidating contracts that violate no one's rights. Those that don't like the terms don't have to get cell phones - I don't have one for just that reason. Just because I don't like someone else's terms does not give me the right to bring the government in to give me a "better deal". The moral principle (not the business situation) does not change even if there are hundreds of millions of people that feel the same way. Would you like it if one of your customers or acquirers agreed to do something in writing and then came back a year later to sue you for better terms? The fact that the cell phone companies are bigger and more established does not invalidate this principle. If you want quality and value straightforward dealings as highly as I do, be principled and don't buy things you don't like. Try to to change the culture by reason rather than through the coercive force of the government; do it this way, and what you fight for will last far longer than some bullshit court ruling.
- dhimes 18y ago
  Unless it is illegal...
- helveticaman 18y ago
  Yeah...I agree. However, I'd prefer more competition between oligopolistic telcos.
  - maxharris 18y ago
    One of the primary illegitimate means of preserving oligopoly and other states that economists characterize as "market failure" is regulation. For small-time examples, see the crooked politics and business licensing laws of Louisiana. For larger ones, look carefully at FDR's 1933 National Industrial Recovery Act, which, among other things, actually legalized cartels. Although the act was declared unconstitutional in 1935, both government and business were further corrupted thereafter. But not all cases of monopoly or oligopoly should be considered harmful - businesses that win such positions by the strength of outstanding execution or innovation (Alcoa in the 20th century, for instance) should be left alone. What I advocate is removing the government crutch that keeps some businesses in unnaturally advantageous situations. Think of things like the farm bill, or the FDA.
wmf 18y ago
Eventually I think the carriers will be forced to replace the contract+ETF with a standard loan, which isn't that different from a prorated ETF anyway. It will still allow subsidized phones and plenty of revenue for carriers, but it's a more familiar concept.

19 points by brianlash 18y ago

This is based on CA state law, and (from the Mercury-News link in the post): Whether Sabraw's ruling will stand isn't clear. Experts say an appeal is likely, and the Federal Communications Commission is considering imposing a rule - backed by the wireless industry - which might decree that only federal authorities can regulate early termination fees. 3e-3 cheers for the FCC. Sigh.

jrockway 18y ago
Do FCC rules override state law? I've read a few cases involving FCC rules, and the FCC nearly always loses. If the federal government wants to restrict states' rights, they need to amend the constitution, not pass "FCC rules".

akd 18y ago

So does this mean it's time to buy a Sprint phone (or even iPhone, if the ruling applies to all carriers) in California on a long-term contract and then break it immediately? Before they change policies?

Xichekolas 18y ago

The fact that the cellular industry still has ETF policies and hardware lock-in is really sad. I mean, imagine if you had to buy your computer from your internet provider, and then it only worked with that provider. Switching from Comcast to Verizon would mean buying a new computer, and agreeing to some two year contract. The fact that the iphone would cost $399 instead of $199 is not a valid argument in favor of the ETF lock-in. I'd rather actually own my hardware, instead of what basically amounts to leasing the hardware with a modest down-payment and a hefty penalty if you try and switch carriers or end service. Just like with cars, some people may find it more advantageous to lease their hardware. Good for them, let them lease and make an ETF part of the agreement... but give us an option to 'buy the car' (or iphone).

jedberg 18y ago
You already have that option with pretty much every phone except the iPhone. Every carrier will let you buy the hardware at an "unsubsidized" rate, and then get a contract with a higher monthly price, but no lock in. It's just that no one does it, because it is so much more costly.
- wmf 18y ago
  Er, if you buy an unsubsidized phone you should get a lower-priced, non-contract plan. But you probably don't, which I guess is the point.
  - BrandonM 18y ago
    I was very frustrated when I bought a Nokia N82 so that I could have an unlocked GSM phone, only to find out that the only service that works in my area is AT&T anyways. But hey, I already bought my phone, I should just be able to get a non-contract plan, especially if I'm willing to pay the full (phone-subsidizing) price each month, right? Nope. You can't get a normal monthly plan without signing up to at least a one-year contract. I even had to pay for the freaking sim card, not to speak of the activation fee. So I paid something like $500-550 for my phone, sim card, and activation fee, and I'm still in a one-year contract, all for the same monthly rate that I would be paying if I had gotten a plan that came with a free phone. Something is wrong here.
- cameldrv 18y ago
  Simple. Buy the iphone for $200, set aside $200 for the ETF. Your iphone is now $400. If you stay put for the two years, throw yourself a party or something.
trekker7 18y ago
$199 instead of $399 might be a valid argument, if you were poor and just wanted a phone to talk to people and didn't care about lock-in.
- 18y ago

maxharris 18y ago

I don't think the government should be in the business of invalidating contracts that violate no one's rights. Those that don't like the terms don't have to get cell phones - I don't have one for just that reason. Just because I don't like someone else's terms does not give me the right to bring the government in to give me a "better deal". The moral principle (not the business situation) does not change even if there are hundreds of millions of people that feel the same way. Would you like it if one of your customers or acquirers agreed to do something in writing and then came back a year later to sue you for better terms? The fact that the cell phone companies are bigger and more established does not invalidate this principle. If you want quality and value straightforward dealings as highly as I do, be principled and don't buy things you don't like. Try to to change the culture by reason rather than through the coercive force of the government; do it this way, and what you fight for will last far longer than some bullshit court ruling.

dhimes 18y ago
Unless it is illegal...
helveticaman 18y ago
Yeah...I agree. However, I'd prefer more competition between oligopolistic telcos.
- maxharris 18y ago
  One of the primary illegitimate means of preserving oligopoly and other states that economists characterize as "market failure" is regulation. For small-time examples, see the crooked politics and business licensing laws of Louisiana. For larger ones, look carefully at FDR's 1933 National Industrial Recovery Act, which, among other things, actually legalized cartels. Although the act was declared unconstitutional in 1935, both government and business were further corrupted thereafter. But not all cases of monopoly or oligopoly should be considered harmful - businesses that win such positions by the strength of outstanding execution or innovation (Alcoa in the 20th century, for instance) should be left alone. What I advocate is removing the government crutch that keeps some businesses in unnaturally advantageous situations. Think of things like the farm bill, or the FDA.

wmf 18y ago

Eventually I think the carriers will be forced to replace the contract+ETF with a standard loan, which isn't that different from a prorated ETF anyway. It will still allow subsidized phones and plenty of revenue for carriers, but it's a more familiar concept.