all micro contact rss

AT&T imposes a new $325 early termination fee, just like Verizon

> Bad news is traditionally reserved for Friday—late Friday afternoon being most promising. And last Friday, AT&T dropped a bit of bad news in an “open letter to our valued customers”: get ready to pay $325 in early termination fees (ETFs) if you want a new iPhone.
via [arstechnica.com](http://arstechnica.com/tech-policy/news/2010/05/digging-into-atts-new-325-early-termination-fee.ars?utm_source=rss&utm_medium=rss&utm_campaign=rss)
A few things to say about this development, late as I may be to chime in:

First: LAME. AT&T seems absolutely hell bent on making its customers hate the company as much as humanly possible. I’m reminded of “A Bronx Tale”, when Calogero asks Sonny if it’s better to be feared than to be loved. Sonny choses fear, of course, because that’s the path he’s already gone down, and it’s too late for him to change.

Sonny is dead by the end of the film, and Calogero learns that Love is the way to go. But I digress…

Now that that’s out of the way, let me go into what I think this means for the future of the iPhone. Lots of people are speculating that this raised fee implies that a Verizon iPhone is set to be announced in a few weeks at WWDC. Actually, I believe the opposite is true. This announcement practically guarantees that there will NOT be an announcement of iPhone on Verizon, or Sprint, or anyone else in the US, at least not until well after the new iPhone HD (or whatever Apple calls it) is shipping.

Why? Think about it. This new raised ETF will only apply to people who sign up for new contracts. Evil as AT&T may be, they can’t impose a higher ETF on current contracts, like the ones we all are in now.

If Apple were going to announce a new iPhone running on Verizon in a few weeks, and AT&T would have to know that, they’d want to do whatever they could to stem the tide of people dropping AT&T for Verizon. Raising that fee on new contracts wouldn’t help convince people to sign up again.

Sure, Verizon charges the same high fee, but that’s the point. AT&T could use their lower ETF as a bargaining chip to keep their customers for a little while longer. At least some of them.

The non-AT&T US iPhone is indeed coming, but with the NEXT generation of iPhone after this one to be announced. Probably at least six months, if not a year, away from now. Most Apple fanatics can’t wait a year for the latest and greatest from Apple. So we’ll all sign up for AT&T one more time this summer. And then when the Verizon iPhone does come out a year later, we’ll be either discouraged by that extra fee from leaving, or we’ll pay the extra money. Either way, AT&T wins. If making more money in the short term could be considered winning.

You see, at this point, AT&T knows we hate them. So they are going to milk as much money as they can from us before we leave. They’ve made a clear decision that it’s cheaper to have us leave than it would be to get us to like them enough to stay. It’s not personal. It’s business.

What I can’t figure out is what AT&T plans to do AFTER that mass exodus occurs. This new fee buys them maybe an extra year of life. What do they do after that?

Then again, CEOs in the US aren’t generally known to be long-term planners. They think in quarters, not decades.

I’m also curious to see what happens once everyone does abandon AT&T for Verizon. If Verizon managed to grab even 20% of AT&T’s business with an iPhone, I’m guessing the network would experience strains similar to what AT&T has now. Then people will get angry with Verizon, pay the $350 fee, and go back to AT&T. And then back to Verizon. etc.

Maybe that’s the long-term plan.