If you're planning on buying a phone from AT&T, there's good news and bad news.
The good news is that for basic and quick messaging phones, the cost of getting out of a two-year contract will drop from $175 to $150, minus $4 for every month you own the phone. The bad news is that the early termination fee for smartphones, such as the iPhone, and netbooks, will jump from $175 to $325, minus $10 for every month owned.
Both ETF changes will be effective on June 1, and won't apply to existing contracts, only new customers and renewals.
AT&T, in "An Open Letter to our Valued Customers," doesn't explain the changes. I imagine the rationale is similar to what Verizon Wireless was forced to explain to the Federal Communications Commission, after the carrier increased its own smartphone ETF to $350: As new smartphones consume more data, the cost of supporting them rises, Verizon said in December. Instead of charging higher monthly fees, Verizon recoups the cost by charging people who want out of their contracts early.
Of course, a more cynical explanation might be that wireless carriers want to make money, and there's no way they could raise data prices because people would simply take their business to the competition. I'm not totally convinced of this argument, Sprint pushes towards cheaper voice-text-data packages but is still losing subscribers.
In any case, because I have no plans to cancel my contract early, I'm sort of okay with the higher early termination fees on the condition that network quality actually improves. In the court of public opinion, Verizon has a better reputation than AT&T, and claims to have better 3G coverage. Verizon has also touted that it's prepared to handle iPhone data demand if it were ever made available for the network. The idea that ETFs are being put to good use seems somewhat plausible. AT&T will have a harder time making that argument -- or maybe an easier time, as the network more desperately needs improvements.
