As most in the mobile community know, Sprint lost a decision this week which forces them to pay $18.2 million — and cease trying to collect $54.7 million — to members of a class action lawsuit against them regarding early termination fees. It’s a big deal. Verizon was entrenched in a similar suit, but settled before a judgment could be rendered. As such, they’re saying they weren’t wrong. Sprint, though, has little to fall back on, other than an appeal. As the ruling stands now, early termination fees violate California state law. It’s not permanent yet, but it could be. So what would that mean for the wireless industry?
First, it puts wind into the sails of those who want federal guidelines for early termination fees. States rights? Who said anything about states rights?
“A consistent, uniform, national framework of standards is the best-case scenario for consumers and for the industry to serve consumers,” [CTIA spokesman John Walls] said. “If you allow 50 states to regulate and legislate in 50 different ways, you can create a very confusing and obviously inefficient service.”
The hope is that federal lawsuits will help cut down on lawsuits against telecoms. It would seem to make the process harder at least.
The second effect is on the subsidies we realize on new phones. I’ve turned blue in the face saying this, but if early termination fees go, that essentially negates contract cell phone services. To get us to sign these contracts, carriers bribe consumers with a heavy discount on a new phone. So will the incentive to bribe be gone?
There will be plenty to think about over the next few weeks and months as this issue gets sorted out. While it has been quite for a while, it appears that the issue of ETF regulation isn’t going to die easily.
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