April 9, 2007
with Fees, Long Term Contracts
Consumers Union Concerned with Growing Use of Early Termination Fees
Washington, D.C. – While early termination fees have long been the practice in the cell phone industry, a recent informal survey by Consumers Union found the practice has spread to high-speed internet service. Typically, the fees are included in the fine print of long-term contracts of a year or more.
According to a review of the major broadband service providers, early termination fees can range from $79 to $200 dollars to discontinue service. Comcast and Time Warner Cable, the two largest cable companies, did not impose early termination fees on the broadband contracts CU reviewed.
“Early termination fees are anti-competitive and deprive consumers of the benefits of purported competition in the markets where there is more than one broadband provider,” said Jeannine Kenney, senior policy analyst for Consumers Union, publisher of Consumer Reports®.
Like wireless phone companies, some broadband providers that are including early termination fees as a condition in long term contracts say they are justified because consumers are usually getting a break on monthly rates, or free or discounted installation and equipment.
“The justification for early termination fees is suspect. Once enticing consumers to sign up, broadband providers should rely on quality, service and price to build customer loyalty, not onerous contract terms that hold consumers hostage,” added Kenney.
The analysis of broadband service included a review of contracts from AT&T (including SBC and BellSouth), Comcast, Time Warner Cable, Verizon, Qwest, and Earthlink and interviews with company representatives.
For more information, see http://www.consumersunion.org/blogs/hun/2007/04/the_next_big_thing_in_broadban.html.
Contact: Bob Williams, 202-462-6262, willbo@consumer.org