I'd pay $600 for a no contract smartphone

Jun 27, 2011

Scaling Early Termination Fee
by: PrepaidWirelessGuy

Thank you for your feedback. At $600 for a smartphone, you should be able to buy virtually any top-of-the-line smartphone on the market today (ex. EVO 3D, iPhone 4, Droid, etc.). I remember paying $700 for a non-subsidized Palm Treo 700p back when it first came out, however, most phones nowadays don't even go up that high.

The good news is that for much less than that (in the $300-$400 range), you can now get a full featured smartphone on prepaid, and over the remainder of the year you'll see top end performance, including 1GHz processors, 5MP cameras, high resolution displays, etc. i.e. Your price point is very fair, and even higher than you need to pay.

A couple of years ago there were class action lawsuits against major carriers regarding the early termination fee, commonly $200. I can't recall if it was Verizon or AT&T that was first, however, the result was that postpaid carriers starting doing exactly what you describe, whereby the Early Termination Fee (ETF) would be diminished with each passing month that you remained on your contract plan. So, in this example, mid-way through a 2 year contract, you would only have to pay $100.

This made a lot of sense. The spirit of the ETF was to ensure carriers made back their money on subsidized phones by avoiding customers from leaving too early. However, clearly, after a year or more, they've certainly made up the subsidy cost. Believe it or not, it can take 6 months or more (depending on what plan you're on) for a carrier to actually break even. Anyway, charging the full amount a few months before the end of your contract certainly made no sense at all.

So, if there's a phone or plan you just have to have on postpaid, and you're willing to sign a contract, the ETF isn't as bad as it used to be. Though prepaid often tends to have the same or similar plans and features for a much lower monthly cost. If you can find a prepaid phone you like, you're golden!

I'd pay $600 for a no contract smartphone

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I'd pay $600 for a no contract smartphone

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