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FCC seeking answers on wireless termination fees

By Joelle Tessler
Associated Press / January 27, 2010

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WASHINGTON - Federal regulators are asking the nation’s largest wireless companies whether they give customers adequate notice about early termination fees for breaking a service contract before it expires.

The Federal Communications Commission sent letters yesterday to AT&T Inc., Verizon Communications Inc., Sprint Nextel Corp., T-Mobile USA Inc., and Google Inc. seeking information about their approaches to early termination fees.

The FCC is asking about the size of the fees and the rationale for them. It also wants to know if carriers prorate such fees if a cancellation comes closer to the end of a contract and if they offer trial periods that allow new customers to cancel service without being charged a termination fee.

In addition, the FCC is asking why customers who use Google’s new Nexus One phone on the T-Mobile network have to pay early termination fees to both companies if they break a contract. The Nexus One phone costs $179 for customers who sign up for a two-year plan with T-Mobile, or $529 for those who purchase an unlocked phone that can be used with any GSM wireless network, including T-Mobile’s.

The FCC wrote that early termination fees are substantial and “have an important impact on consumers’ ability to switch carriers.’’ It is too soon to know if the agency is plans to adopt rules to standardize notices about such fees.

“Our goal is to make the practice of imposing early termination fees clear, understandable, and transparent to consumers,’’ said Joel Gurin, head of the FCC’s Consumer and Governmental Affairs Bureau.