U.S. Rep. slams iPhone, AT&T over termination fee | iLounge News


U.S. Rep. slams iPhone, AT&T over termination fee

Rep. Edward Markey (D-Mass.), chairman of a House subcommittee on telecommunications and the internet, slammed the iPhone’s restrictions this week in Washington. Even though the phones become expensive paperweights if customers quit AT&T’s plan, claims Markey, AT&T still charges a $175 termination fee. Markey went on to say that the phone has “Hotel California service. You can check out any time you like, but you can never leave - you’re stuck with your iPhone and you can’t take it anywhere.” The termination fee Markey mentions is quite common and can be found in virtually all long-term cellular contracts in the United States. While it is true that you can’t use take the iPhone to another service provider, the capabilities it retains after activation — iPod and Wi-Fi — are generally far greater than any other phone after being removed from service.

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IT’S A PRODUCT PROVIDED BY A PRIVATE COMPANY!!!  If you don’t like it, Representative Markey, provide your own cell service. 

One of the current reasons that companies charge what they do for cell phones/plans (relatively low rates) is that you SIGN A CONTRACT.  There must be fees associated with early termination of a contract.  That is what a contract entails.

God, I hate posturing by representatives.

Posted by OnlyShawn on July 12, 2007 at 9:16 AM (CDT)


While his criticism of the iphone is misguided, his jab at handset restrictions and termination fees are not.

If you’ve ever been overseas you’d see how the cell business should be here.

You basically walk into a store, pick any phone that suits you, and pick a carrier to activate it through.  Locked phones are largely non-existent.

Heck if they’d have had this here I’d probably have kept my Startac until Blackberry’s came out.

Posted by ArtVandelay on July 12, 2007 at 9:25 AM (CDT)


What a load of you know what.  I had to pay a termination fee with my Verizon account so what’s the difference if AT&T does.  Not to mention the fact the iPhone rocks and will only get better with updates.

Posted by eg on July 12, 2007 at 9:32 AM (CDT)


But the reason why there’s a contract is because most of the time the carrier is subsidizing the cost of your hardware, so they need time to recover that loss. In the new “iPhone” world, they don’t subsidize the cost of the hardware, and yet you’re still paying the same rates as you would for a subsidized phone. AT&T is making out quite well in this arrangement. In this scenario, I think AT&T should treat your service as they do with all other expired contracts…you’re basically on a month-to-month service plan with no cancellation/termination fees.

If AT&T were to have pitched in $100-200 to lower the out-of-pocket cost of my iPhone, then I have no problems with them severely penalizing me for cancelling my contract early.

Posted by weshsu on July 12, 2007 at 9:44 AM (CDT)


Or…just follow the Ars Technica tip and activate your iPhone with a prepaid plan


Posted by The Raven on July 12, 2007 at 9:49 AM (CDT)


The Representative has a point that speaks to the perversion of the GSM standard that is American mobile telphony. No phone should be “locked” to a carrier, especially one so overpriced as the iPhone. If you break your contract, you should pay your termination fee (since those are the terms)... and then take your phone with you to your new carrier and happily use it there!

Oh well, the iPhone lemmings will have to learn their lesson the hard way.

Posted by Doctor Mantis on July 12, 2007 at 9:55 AM (CDT)


This issue is non-existent, as the Iphone was cracked within the first week of it being available.  Yes, AT&T and Apple may have been greedy to have locked the Iphone.  Who cares?  As demand for the device to be unlocked rises, there are PLENTY of people who have the time, energy and ability to make it happen… oops it already has.  DRM, locked phones… all of it is going out the window.  We are simply in the process of teaching the corporation that.  THEY are the ones learning the hard way.

Posted by Jay on July 12, 2007 at 10:06 AM (CDT)


Rep. Markey and StSumwhere both live in utopia. all companies charge termination fees if you opt out before the 2 yr agreement no matter which carrier or phone you buy.  Are the fees with the iPhone and AT&T on the high side? Yes! but they are not hidden and if you don’t like them DON’T BUY IT, that is the definition of free market, duh!

Posted by hydra-calm on July 12, 2007 at 10:22 AM (CDT)


“The phones, which cost between $500 and $600 - are usable only on AT&T Inc.’s wireless network and will remain that way until 2012.”

So if you can’t use the phone excpet with AT&T for the next 4+ years (in that time the company may change to another name, back to Cingular again?) then why do they even bother with the 2 year contract? If you can’t go anywhere else with the phone you’ll have to use it with them. I don’t think people want to pay $600 for an 8GB iPod, they’ll want to use the wireless phone/internet features.

Posted by Doctor Manhattan on July 12, 2007 at 2:24 PM (CDT)


It’s disingenuous to single out the iPhone, as this is an issue with EVERY Verizon phone .  Try using your Q on T-Mobile;)  Save your breath with the subsidy argument…if I buy a new phone and don’t agree to a new 2 year contract, I pay full retail AND still have a termination fee.

However, by using the iPhone as an example, it will bring more press to the issue of termination fees and other oligopolistic practices by the cellphone industry.

Once again, the iPhone is changing everything.

Posted by David on July 12, 2007 at 2:38 PM (CDT)


david…I love that more press is being brought to the situation.  I just hope it causes other companies to choose to drop termination fees, or use some other method of competing, rather than having a top-down approach of governmental regulation (which is what this congressman would likely love to do—it would get him some great press), because that will cause all kinds of unintended consequences.

So…“yeaaaaah complaining! whoohoo!”

Posted by OnlyShawn on July 12, 2007 at 3:10 PM (CDT)


And….david…I think we’re paying a good bit less for phones (even at “full retail”) than the rest of the world is, because of these locked-in contracts.  I’ve seen a few people from outside the US on forums now and then mention that we have it easy when it comes to buying new phones.

The fact that you don’t pay more for a phone when you sign up for it w/o a contract doesn’t mean that the issue of a contract (and relative necessity of having a contract, as the market currently stands) doesn’t mean that the contract setup hasn’t set the phone price lower than it would be all on its own.

Posted by OnlyShawn on July 12, 2007 at 3:13 PM (CDT)


Yeah, well he can bitch at Verizon if he likes about my locked Treo 650 to their network that cost me $500, or my Treo 600 that was locked to T-Mobile before that.  Wooo I can use it as a PDA minus cell, but of course at least with the iPhone I can still use Wifi.  This is BS and he is a typical person in office… Ooo this will get my name in the papers so people know who I am so next time I run…

You can’t single out AT&T and the iPhone when for years phone companies have been tying $500+ phones to only their networks, and have termination fees.  Its my choice to buy, and to terminate early if I like.  What I am saving on the unlimited AT&T data plan compared to what I was being charged for my unlimited Treo data plan on Verizon (without wifi data abilities in the PalmOS based 650), the phone and the termination fee for my Verizon contract will both be paid for by the end of the 2 year contract anyway so I got the iPhone and the termination fee free over the next 24 months… yeah, sounds like I am being screwed… pff.

Posted by Non-issue on July 12, 2007 at 6:10 PM (CDT)


Come on Sheepeople. baaa baaaa. We should not have all these restrictions on cellular contracts. The fee model is outdated when home phones now have unlimited calling no long distance etc. really any any time minutes. We should have one fee for using the phone when we want to period. We should also not put up w/ the termination fees when paying FULL price for a phone!! I can understand where there are incentives, but come on people are you people or sheepeople. baaa baaaa.

Posted by DWM on July 12, 2007 at 8:40 PM (CDT)


David: One reason your Verizon phone won’t work on T-Mobile is because the cellular technologies are completely different. Verizon and Sprint use the CDMA system, which is found mainly in the US, Japan, and S. Korea. T-Mobile and AT&T use GSM, which 85% of the world uses. And with GSM, you get a SIM card that you simply put in any UNLOCKED phone and it works on the carrier that sold you the SIM.

DWM: I’ve always wanted to start my own European-style GSM carrier here in N. America. Just bring your own UNLOCKED phone and I sell you the SIM card to use in it. That’s the way it *should* be!

Posted by Doctor Mantis on July 13, 2007 at 10:10 AM (CDT)


While at a conceptual level, I agree that GSM phones shouldn’t be locked, but part of the reason for locking it to AT&T is that AT&T added whatever they had to to support things like visual voicemail, iTunes activation, and the “special” iPhone data packages. If you moved an iPhone to any other GSM carrier, you’d lose visual voicemail. Then people would blame Apple for their less-than-ideal experience with the phone.

I’m assuming that the iPhone will do well, and over time, I think that Apple will convince other carriers to implement visual voicemail, iTunes activation, and whatever else a carrier would need to support the “Apple experience”.
Whether you like the iPhone or not, you can’t argue that Apple is shaking things up…hopefully for the better. I know I sure prefer the activation of the iPhone over any activation I’ve done with a previous phone. There’s no reason I should have to waste 30+ minutes of my life waiting in line and signing a few contracts to activate a phone or upgrade to new hardware. I was in and out of the Apple store in 10 minutes (5 was to play with the iPhone <grin>). And, in the comfort of my home, it only took a few minutes to change my data plan and activate the phone. I hope this is the future of phone purchasing and activation.

Posted by weshsu on July 13, 2007 at 11:35 AM (CDT)


Doctor Mantis,

I understand that Verizon phones don’t work on other carriers because of the technology, but one COULD make the same argument for the iphone, specifically visual voicemail, and more importantly, iTunes at-home activation.

The point of my post was that this is an issue with many, if not most phones available in the U.S. and has been that way for years.  To single out the iPhone is, again, disingenuous.

Posted by David on July 13, 2007 at 12:24 PM (CDT)


My Cable provider have no contract and they seem to run just fine. They even have 1 year promos and still don’t lock you into a contract.

Posted by Nasir on July 14, 2007 at 12:35 AM (CDT)

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