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FCC Chairman Outlines Plan for Early Termination Fee (ETF) Regulation

News by Michael Oryl on Friday June 13, 2008. 

Yesterday FCC Chairman Kevin Martin outlined a possible plan for regulating carrier ETFs (early termination fees). Martin said that while he see federal cooperation with state authorities as a requirement, he felt that a “patchwork” of 50 different sets of regulations and the current trend of class action suits was not the best course of action for protecting consumers.

While he did not say that the FCC was going to claim jurisdiction in this matter, he hinted that it was a possibility. His outline for ETF regulation had 5 main points.

1. ETFs should be linked to the cost of the phone (though we believe he meant the amount of the carrier subsidy put towards the final price of the phone).
2. ETFs should be prorated over the life of the contract term (Verizon and AT&T already do this).
3. Any contract should be for a “reasonable” length of time (the chairman failed to clarify).
4. Contract renewals should not cause the ETF to be extended (we assume he means if no new subsidized phone is purchased or received by the consumer).
5. Consumers should have until after they receive their first bill to cancel new service without being forced to pay an ETF of any sort.

Chairman Martin said that he believes ETFs are a legitimate way to recoup legitimate expenses (carrier subsidies), but that he fears they are also being used to inhibit a consumer’s right to choose and ability to move to a new company for service when dissatisfied.

Chairman Martin’s statement, as well as those of the other commissioners and those that testified, can be read at the FCC website.

About the author

Michael Oryl
Michael is the Philadelphia based owner and editor-in-chief of MobileBurn.com. He also operates several other tech sites, including AndroidAuthority.com.

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