Sprint, T-Mobile to Pro-Rate Early Termination Fees

The two carriers have finally seen the light, promising to replace flat cancellation fees with a sliding scale based on how much time remains on your contract. However, the carriers' respective new policies won't take effect until next year—and, as always, there's a catch.

Both Sprint and T-Mobile say they'll start pro-rating early termination fees starting in 2008—a policy that Verizon Wireless adopted nearly a year ago, while AT&T got on board last month. The general idea is that instead of paying a flat $200 fee for dropping your carrier before your contract is up, the fee declines depending on how much time is left: for instance, on Verizon Wireless, you'll pay a $175 fee if you cancel in the first month, and the charge drops $5 each proceeding month (so you'll pay a $115 early termination fee if you're a year into your 24-month contract).

But here's the thing: none of the other three carriers have gone into detail about how their sliding scales will work (all three will go into effect next year; Verizon began its pro-rated plan last year). And here's another catch: Verizon, T-Mobile, and AT&T will only pro-rate early termination fees if you're a new or renewing customer. In Verizon's case, you must have signed/renewed a contract after November 16, 2006, when its pro-rated plan started; AT&T and T-Mobile's new policies don't take effect until next year, so if you're an existing customer under your original contract, you'll still be stuck with a hefty flat fee for canceling early. (Sprint hasn't gone into specifics about who's eligible for the pro-rated fees, but I'd expect it to fall in line with the other big three.) 

I guess that's one way of rewarding customer loyalty, huh?

Related:
T-Mobile says "me too," gives in to prorated ETFs -- next year [Engadget Mobile]
Press release [Sprint]