Originally Posted by kennyc
If that's the case then why is this law being enacted?
Some years back, though I'm not sure how it came about, wireless phone companies significantly lowered their early termination penalties. Back when I got my first cell phone (1997 I think?), if I cancelled my 2-year contract, I was on the hook for the entire cost of the remaining contract plus an inflated cost of the phone PLUS an additional early termination fee in the form of the initial deposit. We're talking thousands of dollars, depending on when the contract was cancelled.
(It's worth noting that when I moved to an area where they had recently stopped existing and the new owner of that region wouldn't honor my contract, they let me out with no questions asked and returned my deposit in full.)
As it is now, for AT&T smart phone contracts with subsidized phone, the early termination fee starts at $325, and is reduced by $10 for each month of fulfilled service.
$325 is a pretty good deal for a $600 phone, yeah? Break the contract, pay the fee, unlock the phone and go no-contract with another carrier for half the monthly cost.
That's one reason why I can see this being in place. But I don't think this is the best way to go about it.