T-Mobile Gets Sued Over Termination Fees
But it is at least a start. If the suit is successful I can see some sweeping changes to mobile phone contracts. In fact, I predict some "pre-emptive" changes possibly coming soon.
I have never understood why they charge so much for service cancellation fees. (They being not the magical "They" that is responsible for almost anything, but rather in this case I mean mobile phone providers in general).
I mean - at most they are out the cost of the deal you got on the phone. They already usually charge you a setup fee, activation fee or something like that... That covers their manpower needed for the slightly-above-minimum-wage employee to type your name into the computer and open your box and show you the "on" button. Other than that labor involved, they mostly just need to recoup the cost of the phone.
Say there is a groovy new Nokia phone that retails for $200 without any phone service, straight from Nokia. (Which you CAN do you know, you don't HAVE to buy a phone from the service provider. I know a guy who only buys European phones because they are way way better than ours.) That same phone probably costs the service provider, say T-Mobile, who buys in massive bulk - half of Nokia MSRP. But to be generous lets say 2/3 of Nokia's retail price is what the provider pays.
That would mean that T-Mobile would be out about $135 for each phone. And you get the phone for $9.95 with your new plan. So their net loss is, at that point, around $125. THAT should be your cancellation fee... The $125 dollars. Maybe another $10 for administration or whatnot... But essentially, you should be on the hook for AT MOST the retail price of the phone minus what you already paid.
And it should be pro-rated by a percentage of your monthly plan or something. So maybe your
cancellation fee drops by 10% of you monthly plan every month. So you start out with the difference of the prices in Phones, say $125. You signed up for a $50 a month plan, so your cancellation fee should drop by $5 a month until it is down to zero.
Mathematically and system wise it would not be difficult to implement. Have a set price for a phone. When the user sets up a plan, the paid price is subtracted from the set price and that is the initial cancellation fee, which drops every month you have service until you are free and clear.
That way they still encourage people to stick with them, but also allow people who have been with them a while to get out of the contract for not too much money. Better than a 2 year contract I believe.
Understandable and Fair. It will never happen...