T-Mobile to prorate early termination fees

T-Mobile USA is the latest mobile operator to make it easier to get out of those dreaded cell phone contracts.

On Monday the company said that it will pro-rate or reduce the cost over time of its early termination fees for contract customers. This means that customers will pay less to terminate their subscription as the end of their contract nears.

Beginning on June 28, customers with a one-year or two-year contract with T-Mobile will see their early termination fee drop from $200 to $100 if they end their contract with 91 to 180 days remaining on their agreement. If they end a contract with fewer than 91 days left on it, they will pay a termination of fee of $50. For customers who terminate their service in the last 30 days of their contract they will either pay the $50 fee or their standard monthly charge, depending on which one is cheaper.

The new policy only applies to new T-Mobile subscribers and subscribers who are renewing their contracts on or after June 28.

The battle over early termination fees has heated up recently as wireless operators face multimillion-dollar class action suits from consumers who say these fees are unfair and deter competition. Earlier this month a California state jury ruled that Sprint Nextel's fees were indeed legal in the first of these class action lawsuits.

Now the Federal Communications Commission is looking to get involved, and is considering making rules about early termination fees. Chairman Kevin Martin has included pro-rated contracts in his proposal, which he is hoping the commission will consider later this summer. Congress has also weighed in with proposed legislation.

Cell phone operators seem to have gotten the message. And the major players are starting to make changes. Verizon Wireless was the first major carrier to adopt a pro-rated policy almost two years ago. AT&T also announced it had changed its policy in October. Starting May 25 new AT&T subscribers will have their termination fees pro-rated over the life of their contract. The early termination fee will start at $175 and it will be reduced by $5 every month over the life of the one- and two-year contracts.

Sprint Nextel also said it will change its early termination fees. But the carrier has not implemented the new policy yet.

In addition to the new early termination policy, T-Mobile has also recently announced more options for customers who don't want a contract. The T-Mobile FlexPay plan offers T-Mobile customers its typical cell phone packages that include long-distance calling, roaming, and special rate offerings like MyFaves with no contract. Subscribers simply pay the retail cost of the phone and the regular monthly service charge for the service.

T-Mobile has also added more options for its pre-pay and pay-as-you-go customers. Consumers can choose a Pay By the Day plan. Under this plan, users pay $1 for every day they use their phone. They are given unlimited T-Mobile to T-Mobile calling and unlimited night calling from 7 p.m. to 6:59 a.m. For all other calls, users are charged 10 cents a minute. And they're charged 10 cents a minute for outgoing text messages and 5 cents a minute for incoming text messages.

T-Mobile also offers a Pay As You Go plan, which had previously been called T-Mobile To Go. This plan allows customers to pay for minutes they use. If they top off their account with $100, they get a 15 percent discount.

And finally, T-Mobile renamed its Sidekick To Go plan simply the Sidekick Prepaid plan. This plan offers users unlimited domestic e-mailing, Web surfing, instant messaging, and text messaging for $1 a day. And nationwide calling under this plan is 15 cents per minute.

[umbrae]

People only need to pay early termination fees if they don't do the research. I have never had to pay an early termination fee (http://www.wikihow.com/Get-out-of-a-Cellular-Service-Contract). The best way is the FCC trick. Call to complain about an issue a few times (billing problem, dropped calls, etc.) then cancel. When you get the bill, call them and ask them for the local FCC office that handles customer complaints. They will NOT want to give you this number. Explain to them you want to complain to the FCC that you were charged a termination fee after to terminated your service for bad services. FCC regulations make it illegal for the company to put you in collections while they are reviewing your complaint (which can take YEARS). As such, most will just waive the fees since they also do not want the FCC to get any complaints on them either.

[Travis742]

Waiting to prorate a 2 year contract until only 6 months is left is silly; they should use a straight-line prorating scheme where an equal amount is taken off each month until it hits zero at the end of your contract (similar to Verizon). If they really are trying to recoup their costs, then each month you are with a cell phone carrier should reduce your obligation under your contract; the way TMobile is doing it is quite greedy and is one of the worst proration schemes of all the carriers.

[cherylc50]

well what i don't understand is for people that have been with a cell phone company for yrs why do they still have to pay a fee? i've been with at&t for 4 or more yrs now and they told me i would have to pay an early termination fee which is not fair at all. they are just helping the new customers that sign up not the ones that have been there for awhile now???????

[D_Skinner]

They will only charge you an early termination fee if you are in the middle of a current contract. Remember, when you buy a new phone at a subsidized price, they will most likely place you under an additional 1 or 2 year contract. I suggest that you read the fine print before making any changes to your plan.

Once you are not under contract, you can go to another service provider and they are not entitled to charge you any fees for termination, since there is no contract to terminate.

[mattetch12]

"T-Mobile also offers a Pay As You Go plan, which had previously been called T-Mobile To Go. This plan allows customers to pay for minutes they use. If they top off their account with $100, they get a 15 percent discount"

Total Lie!

once up on a time ; before july 2006.. a 10 dollar top up would get about 52 minutes with the supposed 15% discount, but after that tmobile changed there rules and regulations and it went down to only 35 minutes, regardless of the gold rewards program or not..

i dont get american cell phone companies, all they want to do is rip you off...

[Pretty_Prue]

Well looks like they are offering new alternatives to the ETF. There is Pay as you go plans that are much lower then contract plans. I recently found this deal that is 50% off the monthly contract plans:

http://www.dealdigs.com/interAction.php?linkid=10756

Let me know how you guys are liking the new T-Mobile pay as you go plans. I just got started with the $55 unlimited plan and so far the service is great and T-Mobile coverage in my area is excellent.