A recent court ruling against Sprint (S), has declared audacious Early Termination Fees to be illegal; resulting in Sprint to pay $73 million dollars to customers who were charged maliciously by the wireless carrier. This is the time to terminate Early Termination Fees.
Though I’m eligible for a refund, I doubt I’ll ever see it. I anticipate not a dime, thanks to Sprint’s legal counsel who are reviewing the legal decision as to whether they want to appeal it or pull some strings at the FCC for immunity from state lawsuits.
Verizon, AT&T and Alltel are probably shaking in their customer retention boots. If it’s illegal for Sprint to assess penalties to consumers for canceling service, it’s assumed that consumer watchdog groups wouldn’t miss a beat to spear the wireless carriers over questionable fees.
In all fairness, wireless carriers argue that ETFs balance the cost of subsidizing new cell phones when opening lines of service for customers. I believe this point is true, especially with Verizon’s “New Every Two” — a complimentary cell phone upgrade offered to loyal customers every two years of service. I’m not aware of similar programs from competitors, so Verizon could moralize their way out of refunds.
It’s no question that Early Termination Fees are designed to lock customers into contracts that they can’t wiggle out of without dropping three-figures on the table. This practice has worn irreparable harm on consumers’ perceptions and some likely walk away from new lines of service when they are penalized for straying away from the carrier.
It’s also no question that ETFs wouldn’t be required if cellular carriers can meet consumer’s demands and actually become competitive again. The “big four” all offer the same type of plans, and charge expensive fees for inexpensive services (SMS, Ringtones, etc), so where is the competition? The unfortunate challenge that lie ahead of wireless carriers, is that service features and reliability is perceived from their handset’s performance. Again, like I always advocate, it’s the customer service that will ultimately keep a company in consumer’s mind even if the service and products fail.
My point is, ETFs become irrelevant if cellular companies can actually deliver on consumer satisfaction. Consumers want to be loyal, they want to have tailored value, they want to feel empowered. The price of an ETF can burn a customer’s long-term relationship when they seek refuge under another competitor.
That said, I will never return to Sprint. Their service was abysmal, even with a new Blackberry; and I take solace with the fact I’ve turned away numerous of prospects towards the likes of Verizon and AT&T. Their company is designed to disenfranchise consumers, in an effort to earn a few cents from investors and I know they will collapse because of it. It’s only a matter of time until consumers exercise their rights for truly exceptional service.
Consumer advocacy is more than few press releases or a few checks cut to charitable causes; it’s serving your customers, standing up for your customers. Early Termination Fees don’t empower customers nor does it breed loyalty. I (and many) can only hope that wireless carriers will make the right decision to empower consumers.