Wireless

Verizon Wireless said AT&T is suing the wireless operator not because its recent ads are untrue, but because the truth hurts.

AT&T earlier this month filed a lawsuit claiming that Verizon is misleading customers by suggesting that AT&T subscribers cannot access wireless Internet services throughout its network. In the opening paragraph of its legal rebuttal to the suit, Verizon very plainly surmised its argument: "AT&T did not file this lawsuit because Verizon's 'There's A Map For That' advertisements are untrue; AT&T sued because Verizon's ads are true and the truth hurts."

The rebuttal filed on Monday in a Georgia district court was in response to two complaints AT&T filed with the court asking that the Verizon advertisements be pulled from the airwaves. AT&T has called the claims in the advertisement "false" and "misleading." And the company claims it has caused "irreparable harm" to AT&T's wireless business.

Verizon representatives have responded to the press on these claims. But now the company has filed its official response to the court in a 53-page document that lays out the company's defense.

Verizon argues its advertisements are simply pointing out the fact that AT&T has not invested enough in upgrading its network to handle the tidal wave of data traffic experienced by the release of the Apple iPhone, which AT&T sells exclusively in the U.S. Verizon says that it is simply highlighting what many AT&T iPhone customers have already recognized.

"In the final analysis," Verizon said in its filing. "AT&T seeks emergency relief because Verizon's side-by-side, apples-to-apples comparison of its own 3G coverage with AT&T's confirms what the marketplace has been saying for months: AT&T failed to invest adequately in the necessary infrastructure to expand its 3G coverage to support its growth in smartphone business, and the usefulness of its service to smartphone users has suffered accordingly. AT&T may not like the message that the ads send, but this Court should reject its efforts to silence the messenger."

Verizon's initial advertisement, which began airing on TV November 3, shows two maps with red and white splotches indicating 3G wireless coverage. The white area indicates no 3G coverage, and the red indicates areas where 3G service is available. In the ad, Verizon shows an AT&T map that has lots of white spaces, whereas the Verizon map is almost covered in red.

AT&T claims the ad is misleading because it implies that AT&T customers can't use their phones and cannot access the mobile Internet in areas where the carrier does not offer 3G wireless coverage. The truth is that AT&T customers can use their phones and they are able to access the wireless Net using the company's slower EDGE network.

Verizon has modified its ad slightly to indicate that the map applies only to 3G coverage and not regular 2.5G service, which is adequate for making voice calls and connecting to the wireless Internet at slower speeds.

In its filing, Verizon argues that its ads refer explicitly and solely to AT&T's 3G network coverage. And therefore the advertisements should be evaluated on that basis. Verizon claims that it is a fact that its 3G wireless network covers five times more geographic area than AT&T's 3G network. And because this is an undisputable fact, the company should be able to use this in its advertisements.

Verizon pointed to AT&T's own advertisement claims that it operates the nation's fastest 3G wireless network.

"Despite the far smaller size of its 3G network, AT&T has spent tens of millions of dollars making its 3G network, which it dubs the "Nation's Fastest 3G Network," the centerpiece of its national advertising since at least the summer of 2008," Verizon argued. "AT&T now is attempting to silence Verizon's ads that include maps graphically depicting the geographic reach of AT&T's 3G network as compared to Verizon's own 3G network because AT&T does not like the truthful picture painted by that comparison."

But AT&T still asserts that the advertisements Verizon is running are misleading.

"We filed the lawsuit because Verizon's ads mislead customers into thinking that AT&T does not offer wireless service in the vast majority of the country," said Mark Siegel, a spokesman for AT&T. "We look forward to presenting our case."

AT&T wants to set the record straight about its 3G wireless coverage.

The company has placed a statement on its Web site defending itself against critical advertisements Verizon Wireless has been running that highlight areas of the country where AT&T lacks 3G coverage.

"We typically don't respond to competitors' advertising," AT&T said in its statement. "However, some recent ads from Verizon are so blatantly false and misleading that we want to set the record straight about AT&T's wireless-data coverage."

Verizon's initial advertisement, which began airing on TV a couple of weeks ago, mocks Apple's "there's an app for that" slogan. Instead, Verizon's advertisement says "there's a map for that."

The ad campaign shows two maps with red-and-white splotches. The white area indicates no 3G coverage, and the red indicates areas where 3G service is available. In the ad, Verizon shows an AT&T map that has lots of white spaces, whereas the Verizon map is almost covered in red.

AT&T has filed a lawsuit claiming that the ad is misleading because it implies that AT&T customers can't use their phones in areas where the carrier does not offer 3G wireless coverage.

Verizon has modified its ad slightly to indicate that the map applies only to 3G coverage and not regular 2.5G service, which is adequate for making voice calls and connecting to the wireless Internet at slower speeds.

But AT&T is still not happy with the adjustment, and the company wants Verizon to stop running the ads or to alter them further.

What's more, AT&T has added a complaint about a newer Verizon commercial, which characterizes the iPhone as a new arrival to the Isles of Misfit Toys, to the lawsuit. The Isles of Misfit Toys refers to an island where broken toys and misfits would go in the popular Rudolph the Red Nosed Reindeer Christmas special.

In the ad, a toy elephant asks the iPhone what it's doing with the misfits, since it has so many cool apps. The iPhone doesn't really answer, instead flashing the AT&T map, which indicates the spotty 3G coverage. All the toys seem to understand.

AT&T hasn't launched ads of its own to combat the Verizon commercials. But the company's statement on its Web site is its attempt to refute many of Verizon's claims. For example, AT&T points out that its data coverage reaches 303 million people, or 97 percent of the U.S. population, using a mix of wireless technologies. Of course, AT&T admits that not all of these customers are able to access the faster 3G network; only 75 percent of the U.S. population can get access to AT&T's 3G wireless network.

AT&T also emphasizes in its statement that it has twice as many smartphone customers as Verizon. And it says it offers the most popular smarpthone in the industry, the Apple iPhone. AT&T says it offers more mobile applications than its competitors. And finally, it points out that it has the fastest 3G wireless network in the nation, a claim some customers who use the service may question.

There's no question that Verizon's ads are hard-hitting. But it's difficult to say whether they have affected consumers' purchase decisions. Anecdotally, it looks like the ads might have helped Verizon win a few customers. One Motorola Droid customer I interviewed at a Verizon store in New York this week said he decided not to buy the iPhone because of the Verizon ads he saw on TV.

"I was considering the iPhone," said Henry Goodison, of the Bronx borough. "But I saw a commercial about AT&T's 3G coverage. It said, 'Here is AT&T's 3G coverage, and here is ours.' And I thought it would be better to have Verizon, if I travel to another state, where AT&T doesn't have 3G coverage."

It was bound to happen. AT&T is suing Verizon Wireless over its "There's a Map for That" advertising campaign.

When I first saw the advertisements on TV, I thought for sure that AT&T or Apple would file a lawsuit claiming the advertisement was too similar to the iPhone's "There's an App for That" slogan.

I was right about one thing. AT&T is suing Verizon. But I was wrong about the reason behind the suit.

AT&T's beef isn't over the wording of the "There's a Map for That" slogan. Instead the company claims that Verizon is misleading customers into thinking that AT&T subscribers are not able to use their phones in areas where the carrier does not offer 3G wireless coverage.

In the suit that AT&T filed Tuesday in Atlanta federal court, AT&T describes how Verizon's ad campaign shows maps with white spaces, which it claims misleads consumers into thinking that AT&T has no wireless coverage in particular areas of the country.

But that is not the case. The white spaces actually indicate where AT&T does not have 3G wireless access. It doesn't indicate that AT&T has no wireless coverage. In fact, in most parts of the country, AT&T has a 2.5G Edge network.

AT&T doesn't dispute the fact that its 3G wireless service is not in every region of the country indicated on the map. But the company says that the advertisement makes consumers believe that AT&T has no service in those areas, which implies that subscribers can't use their phones at all in those regions.

"Contrary to the misleading message conveyed by Verizon's advertisements, AT&T customers can fully use their wireless devices outside of a '3G' coverage area and undisputedly have coverage in areas depicted by the white or blank spaces on the maps used in Verizon's advertisements," AT&T said in its complaint.

AT&T also asserts in its complaint that it is "losing incalculable market share, invaluable goodwill that it has spent billions of dollars to develop among consumers, and the significant investment it has made in its wireless network."

AT&T is not asking Verizon to stop its ad campaign entirely. And it's not asking its rival to change the wording of its advertising. What AT&T wants is for Verizon to stop showing maps of AT&T's 3G coverage areas that it claims mislead customers into thinking they can't use their phones in non-3G areas.

AT&T has asked for a temporary restraining order against Verizon so that it cannot benefit from the ads while the companies await a permanent injunction.

Verizon Wireless, which is owned jointly by Verizon Communications and Vodafone Group, said AT&T's suit is without merit. The company has said that the ads clearly state that voice and data services are available outside 3G areas.

"The ads are serving to inform customers where the coverage critical to operating a smartphone is available," said Brenda Raney, a Verizon Wireless spokeswoman. "Considering their limited 3G coverage, our competitor should examine whether they are misleading customers with their fastest 3G network claim."

Motorola Droid

(Credit: Motorola)

The hard-hitting advertising campaign and AT&T's lawsuit are just the latest signs that competition in the U.S. wireless market is reaching a fever pitch. More than 89 percent of Americans already subscribe to a cell phone service, according to the CTIA. This means that for wireless operators to grow, they must lure new subscribers from competitors.

Verizon Wireless and AT&T control the lion's share of the wireless market as the No.1 and No. 2 operators in the country, respectively. Sprint Nextel and T-Mobile USA are the other two main national carriers. Sprint has steadily been losing customers for several quarters. And T-Mobile has been unsuccessful in becoming a major threat to the big two operators.

As a result, the rivalry between the two largest wireless companies, Verizon and AT&T, is heating up. Verizon has historically had a very good reputation for having a reliable network with broad network coverage. But even with a strong network, the company has lacked cool phones, which consumers have complained about.

Meanwhile, AT&T's network has had a mediocre reputation at best, but the carrier is the exclusive wireless operator in the U.S. for Apple's iPhone. And despite the fact that subscribers have been complaining about poor service and spotty coverage on AT&T's network, new subscribers are still flocking to the carrier to buy the popular iPhone. In the third quarter, AT&T reported it had signed up a net of 2 million subscribers. Verizon signed up 1.2 million new subscribers for the same period.

But now Verizon is about to launch a phone that many analysts believe could give the iPhone a run for its money. The Motorola Droid, which uses Google's Android operating system, goes on sale Friday. And since the phone was revealed to analysts and product reviewers last week, it's been getting high marks.

Verizon's top marketing executive John Stratton said the ad campaign for the new Droid will be the biggest Verizon has ever launched. But he said that the company will focus more on what the Droid can do and less on what other devices or competitors cannot do. One thing is clear, the battle for wireless subscribers is likely to get nastier.

As a consumer, I hope this intense competition eventually leads to better services, cooler devices, and lower prices. But we'll just have to wait and see. Right now, it just looks like a war of words.

Sprint Nextel has settled its legal dispute with its wireless affiliate iPCS by striking a deal to acquire the company in a transaction valued at around $831 million.

Sprint announced Monday that it plans to buy iPCS for $24 a share, a 34 percent premium to its Friday closing price of $17.88, which means the company will be spending about $426 million in cash. Sprint also agreed to assume $405 million of debt, bringing the total price tag to $831 million.

The deal is expected to close in late 2009 or early 2010. And once it is completed, the companies plan to suspend litigation.

The original agreement between Sprint and iPCS precluded Sprint from operating a competing wireless service in its territory. When the company bought Nextel in 2005, it violated this agreement, iPCS has argued.

The courts have sided with iPCS on this issue. Last year, the Supreme Court of Illinois upheld a lower court's ruling that Sprint must stop owning, operating, and managing its Nextel iDEN network in Sprint affiliate iPCS's territory.

Sprint was given 360 days to divest itself of the iDEN assets in that territory or strike some kind of deal with iPCS. Given that Nextel is the only operator that has used the iDEN wireless technology in the U.S., divesting these assets appeared unlikely.

As the deadline looms, it appears that Sprint was either unable or unwilling to get rid of its Nextel iDEN assets in this area and has instead decided to strike a deal with the company.

Once the merger is completed, Sprint said that it will no longer have to divest its iDEN network in the iPCS markets.

Sprint's merger with Nextel has been blamed for many of the problems facing the wireless operator today. One if its main problems has been a steady loss of valuable wireless subscribers. Since its new CEO Dan Hesse came on board nearly two years ago, the company has worked to improve its network and customer service. It's also been trying to repair its damaged reputation.

But even Hesse has admitted that customer perceptions do not change overnight.

Sprint said the iPCS transaction is valued at 6.4 times estimated 2010 adjusted earnings before income, taxes and depreciation. The company forecasts $30 million of annual cost savings and expects the deal to add to free cash flow in 2010.

Updated at 5:10 p.m. PDT with eBay comment.

Joltid, a peer-to-peer software company established by Skype's founders, filed a copyright suit against Skype Wednesday alleging Joltid's technology is being infringed on by Skype users "in the United States at least 100,000 times each day."

Just the latest in an ongoing license dispute between the popular VoIP service and its developers, the lawsuit, filed in Northern California U.S. District Court, seeks an injunction and damages, which Joltid "reasonably believes are amassing at a rate of $75 million daily," according to the suit.

Also listed as defendants are Skype's current owner eBay, as well as investors in a consortium that earlier this month signed a deal with eBay to acquire a 65 percent stake in Skype, with eBay retaining 35 percent.

"Skype has infringed Joltid's copyrights," a company spokesman said in a statement. "Joltid will vigorously enforce its copyrights and other intellectual property rights in all of the technologies it has innovated."

"Their allegations and claims are without merit and are founded on fundamental legal and factual errors," eBay spokesman John Pluhowski said in a statement.

The lawsuit has the potential to at least complicate the ongoing sale of Skype. In the past, however, eBay has said it's working on its own software to replace what it gets from Joltid.

In 2006, eBay bought Skype for $2.6 billion, but co-founders Janus Friis and Niklas Zennstrom retained the rights to Skype's key peer-to-peer technology--Global Index Software--via the Joltid company they formed.

Joltid terminated its license for the software after learning that Skype had allegedly acquired unauthorized versions of the source code, made unauthorized modifications, and disclosed the software to third persons, according to the lawsuit.

The two companies have been involved in a separate lawsuit in the U.K. over that license termination, but the case isn't set to go to trial until June 2010. Referring to that suit, eBay's SEC filing regarding the sale of Skype says "consummation of the deal was subject to 'no settlement of the pending litigation with Joltid Limited having been effected without the consent of the Buyer (subject to certain limitations).'"

The other defendants in the suit filed Wednesday are Silver Lake Partners, Index Ventures Management, Michaelangelo Volpi, Andreessen Horowitz, and the Canada Pension Plan Investment Board. This lawsuit was first reported Wednesday by The Wall Street Journal.

(Credit: Apple)

For at least the third time this month, Apple and AT&T are being sued by a consumer complaining of being duped into believing that multimedia messaging, or MMS, was already available on the iPhone.

Filed in the Northern District of Ohio on Wednesday (PDF hosted by Wired), plaintiff Deborah Carr says Apple and AT&T misled the public into believing that the iPhone 3GS was capable of sending and receiving MMS messages on the device. The lawsuit claims that Apple's "print and video advertisements...on television, the Internet, the radio, newspapers, and direct mailers" all mention the availability of MMS on the device.

Two similar cases--one in Illinois and another in Louisiana--were also filed against the companies in August.

According to the latest lawsuit, first reported by InformationWeek, customers were told that MMS would be enabled on June 17, 2009, when iPhone OS 3.0 was released.

That seems rather strange, considering that Apple and AT&T announced on June 8, during Apple's Worldwide Developers Conference keynote that MMS would not be available until later in the summer. AT&T confirmed that time frame to Wired on Friday.

"We absolutely will offer MMS on iPhone 3GS and iPhone 3G with 3.0 upgrades in late summer, once we complete some system upgrades that will ensure our customers have the best experience with MMS," an AT&T representative said in a statement cited by Wired.

Carr's lawsuit does admit that Apple has a notice on its Web site explaining that support for MMS would be available from AT&T in late summer. However, the suit characterizes the note as a "mouseprint disclaimer," referring to the small print.

Technically, Apple has enabled MMS in iPhone OS 3.0. The proof is that 29 carriers around the world activated MMS on the iPhone when the new operating system was released on June 17. It's not available in the United States because AT&T isn't ready to activate it yet, which was disclosed on June 8.

We've seen stories on the dangers of DWT (driving while texting). But are we now facing the growing problem of WWT (walking while texting)?

Alexa Longueira,a 15-year-old from Staten Island, learned a painful lesson about the hazards of texting recently. While intent on text messaging as she walked on a sidewalk along the New York borough's Victory Boulevard, she stepped right into an open manhole, sending her several feet into the raw sewage below.

Suffering some cuts and bruises, Longueira was checked out at Staten Island University Hospital and released.

The manhole had been left open briefly by the Department of Environmental Protection just as workers were grabbing some cones to cordon off the area.

"It was four or five feet, it was very painful. I kind of crawled out and the DEP guys came running and helped me," Longueria told local newspaper The Staten Island Advance. "They were just, like, 'I'm sorry! I'm sorry!"

"The DEP is conducting a full investigation of what happened during a manhole incident on Victory Blvd. where workers were flushing a high-pressure sewer on Wednesday evening. We regret that this happened and wish the young woman a speedy recovery," said DEP spokeswoman Mercedes Padilla.

Jumping into action, the parents have already said they're considering a lawsuit. Mother Kim Longueira holds the DEP at fault, telling FOXNews, "Something like that should never have happened. There should have been cones in place, there should have been a man in place."

Mother Longueira was particularly upset about the sewage. "Oh my God, it was putrid." she said. "One of her sneakers is still down there."

This is hardly the first case of the hazards of walking while texting. Chris Matyszczyk, a blogger for CNET News, has bumped into his share of problems with text walkers. Video from a CBS news report on CNET also points out the dangers of texting while walking, especially on crowded city streets.

To be fair, we've probably all been guilty at one time or another of focusing more on our gadgets than on the world around us. Is this something that could have happened to any of us?

CNET forums, meanwhile, have already seen comments from people weighing in on this latest incident. What's your opinion? Who's to blame? And will the DEP ever recover the lost sneaker?

Those annoying robocalls asking if you'd like to extend the factory warranty on your car may soon come to an end.

Last week, the Federal Trade Commission filed lawsuits against three companies--Voice Touch and Transcontinental Warranty, both of Florida, and Network Foundations, based in Illinois--alleging these companies violated the Do Not Call registry law by making more than 1 billion robocalls since 2007 to residences, businesses, and mobile phones.

The suit also alleges that the calls, which have generated more than $10 million since 2007, offer unnecessary and false warranty extensions for several thousands of dollars. And that the firms placing the calls also violated laws by blocking caller ID.

FTC Chairman Jon Leibowitz in a statement called these telemarketing schemes one of the most aggressive the commission has ever encountered.

"I'm not sure which is worse, the abusive telemarketing tactics of these companies or the way they try to deceive people once they get them on the phone," Leibowitz said. "Either way, we intend to shut them down."

Voice Touch and Network Foundations are telemarketing firms that were supposedly making the calls for Transcontinental Warranty, which was selling $2,000 to $3,000 extended car warranties.

The FTC has received tens of thousands of complaints about these calls since 2007. People answering the prerecorded robocalls would hear a message telling them that the original factory warranty on their cars was about to expire and that they should extend coverage before it's too late.

Many consumers receiving these calls were already on the national Do Not Call list. Apparently, the telemarketers were calling nearly every phone number in an area code, regardless of whether these consumers even had a car or not. For example, I live in New York City and haven't owned a car in 11 years, and over the past two years, I've received several of these calls both at home and on my cell phone. Even emergency 911 call centers have been harassed with these calls.

The FTC has asked for temporary restraining orders to halt the illegal robocalls. And the agency is also seeking financial compensation from the companies that can be used to pay back victims of the scam.

A Network Foundations spokesman told CNNmoney.com that the FTC's lawsuit against the company "is a misunderstanding." And representatives from Voice Touch and Transcontinental Warranty have not been reached for comment.

It's been almost a year since a judge in Alameda County, Calif., ruled that Sprint Nextel's early-termination fees are illegal, and yet Sprint and every other major U.S. wireless operator still charges customers a fee for canceling their services before a contract expires.

So what gives? Why are these pesky early-termination fees still around if they are against the law?

That's a good question and one that many readers have asked me over the past year. Because I get so many questions about these fees, I decided to put together this FAQ to help people understand what the recent court decisions mean for them and to provide some information about where cell phone early-termination fees stand today.

Let's start with the most obvious question: What did the court decide in the cell phone early-termination fee case in Alameda County Superior Court in California?
In July 2008, the judge in the case found in a preliminary ruling that Sprint Nextel's early-termination fees were unlawful. In December, the court issued its final judgment upholding that preliminary ruling in favor of the plaintiffs.

Does this mean that the people involved in the class will get some money?
Well, the case is still being appealed by Sprint. But as it stands now, it is unlikely that anyone in the class will get money. And here is why. The court ruled in favor of the class members and ordered Sprint to pay damages of about $74 million. But before the judge's ruling, a jury had upheld Sprint's contract. And the jury found that members of the class had violated their Sprint contracts. As a result, the jury awarded Sprint about $226 million in damages. In the end, members of the class still ended up owing Sprint about $150 million. But Sprint waived its right to collect the money, so the net result was that no one gets any money.

But the court in California found that the Sprint early-termination fees are illegal. Does this mean that I don't have to pay an early-termination fee if I decide to leave Sprint now?
No, it doesn't. For one, the class involved in the lawsuit was only certified for members in California. So for anyone living outside of California, the ruling means nothing, because the court doesn't have jurisdiction.

What if I am a cell phone subscriber in California? Do I still have to pay an early-termination fee?
Yes, cell phone subscribers in California still have to pay the early-termination fee specified in their original contract. The reason is that the judgment in this case only took into consideration the specific facts involved in this particular case. It was not a blanket decision that all early-termination fees are illegal. Rather, the court ruled that this specific type of early-termination fee imposed by Sprint is unlawful in its current form.

In short, this means that cell phone companies can continue to charge early-termination fees. And if they are challenged in court--even in Alameda County or anywhere in California--the court might decide something different based on the specific facts in that case. So technically, it's not accurate to say that early-termination fees are illegal anywhere. Instead, the early-termination fee Sprint charged to consumers in the manner and for the time specified in this case was deemed unlawful. That's all.

What's more, the jury in this case deemed Sprint's contract valid, which means that anyone who doesn't pay their early-termination fee is breaking their contract and subject to the terms of that contract.

A Sprint representative has clarified the company's position:

"Sprint will continue to enforce contracts with current customers," said Matt Sullivan, a Sprint Nextel spokesman. "The court in its ruling did not prevent Sprint from charging an Early Termination Fee when a customer terminates his contract early."

Weren't there other lawsuits over early-termination fees? What was the outcome of these cases?
Yes, there have been a few other cases. Verizon Wireless was also being sued in California over early-termination fees, but the company settled the case in July 2008, agreeing to pay $21 million to former subscribers, who argued that the company's ETF was unfair and excessive.

Sprint is also defending itself in another class action lawsuit that is certified for a nationwide class. The case is being handled in New Jersey, but will cover plaintiffs from former Sprint subscribers in every state, except California. A Sprint spokesman said that the company is close to a settlement in this case and that the terms are similar in scope to the ones in the settlement that Verizon Wireless agreed to last year. A settlement in this case would also lay to rest all other cases against Sprint for early-termination fees, except for the case in California, which is still in litigation.

So it seems like all these class action lawsuits haven't really had much of an effect on the industry since I still have to pay an early-termination fee. Is that true?
Well, not really. The lawsuits and consumer outrage over these fees, likely prompted Congress and the Federal Communications Commission to take notice, which resulted in some public hearings regarding early-termination fees. The FCC had even considered regulating early-termination fees to establish a national policy. But the agency decided to back off, because the industry was taking action on its own.

What have cell phone operators done to change their early-termination fees?
Over the past few years, all four of the major wireless operators in the U.S. have begun prorating their cell phone contracts.

Verizon Wireless was the first to adopt a pro-rated policy in 2006. And now almost every Verizon subscriber has a prorated early-termination fee as part of their contract. AT&T was next. As of May 25, 2008, all new AT&T subscribers have had their termination fees prorated over the life of their contract. For both Verizon and AT&T subscribers, the early-termination fee starts at $175 and is reduced by $5 every month over the life of the one- and two-year contracts.

T-Mobile USA began prorating its early-termination fees on June 28, 2008. Since then, new customers with a one-year or two-year contract have seen their early-termination fees 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 pay a termination fee of $50. Customers who terminate their service in the last 30 days of their contract either pay the $50 fee or their standard monthly charge, depending on which one is cheaper.

Sprint Nextel was the last of the four major wireless operators to offer a prorated contract. As of November 2, 2008, Sprint adopted a policy that drops the $200 early-termination fee by $10 increments beginning in the sixth month of the contract. This means that by the 15th month of the contract, the ETF is down to $100. The new policy applies to both new customers and those who are renewing service agreements, so long as they signed up or renewed their contract after November, 2, 2008.

How can I avoid signing a contract with my wireless provider and avoid an early-termination fee altogether?
All four major wireless carriers offer customers alternatives to contracts. There are prepaid services that allow customers to pay in advance and do not require a contract. Most of the providers also offer the option to buy a handset at full retail price without committing to a contract. Of course, this also means that customers have to pay full retail price and cannot get a free or subsidized phone. Customers then pay service charges on a month-to-month basis.

A few consumer advocacy groups have recently asked the four major wireless operators to waive their early-termination fees for people who have been laid off and can't afford to pay their cell phone bills anymore. Are any of them considering doing this?
No, but wireless operators aren't completely heartless. Most of them allow customers to downgrade their plans to save money without restarting the clock on their contracts or incurring penalties.

But what if I can't afford my pricey data plan anymore? Can I get rid of that and downgrade to a voice-only service?
This is a tricky one. And before you decide to do anything you should check with your carrier about their policy.

Verizon spokesman Tom Pica said that the company deals with these types of issues on a case by case basis. Customers who are having trouble paying their bills can talk to Verizon customer service to work out a solution. But Pica advises people who are struggling to contact customer support sooner rather than later.

A Sprint spokesman said that if a customer with a separate data plan wants to drop that plan and go to a voice only plan or go to a lower data monthly plan, there is no early-termination fee. But, if the customer has a BlackBerry device, which requires a BlackBerry data plan, the customer must swap out his handset to avoid an early-termination fee. If the customer buys a new handset, the two-year contract clock restarts, but if he activates a handset he already owns, there is no early-termination fee.

A customer with a phone and separate 3G wireless data card for his laptop who cancels his data service will be charged an early-termination fee for the data card service. The easiest way to think of it is that the early-termination fee goes with the equipment.