Clock Ticking to AT&T Fee Hike

AT&T announced that it is raising its early termination fee (ETF) for smartphones (a.k.a. the iPhone) from $175 to $325 effective June 1. That gives businesses that are current AT&T subscribers, but seriously considering paying the ETF to switch--especially if the speculation is true that Verizon may soon have the iPhone as well--just one week to decide before it gets much more costly.

If the rumors of a Verizon iPhone are true, those wanting to leave AT&T for Verizon must do so now or pay almost double the ETFs.
AT&T insists that the hike is not in any way related to any single device (a.k.a. the iPhone) or any impending change in iPhone exclusivity. However, it's hard not to connect those dots and at least consider that as a motivation. Regardless of AT&T's motives, businesses considering jumping ship from AT&T should give serious thought to doing so this week.

It is all speculation and innuendo at this point. It is expected that Apple will launch the next-generation iPhone sometime in late June or early July. That prediction, while unconfirmed, doesn't require much in the way of prognostication because it fits the Apple pattern of unleashing a new iPhone each year around June or July every year since the iPhone was introduced.

What is even more rumor and even less certain is whether or not Apple will also announce the anticipated end of its exclusivity arrangement with AT&T and begin to offer a CDMA-compatible version of the iPhone through Verizon. Of course, if it breaks the exclusivity dam Apple could also sell the popular smartphone through TMobile and Sprint, but most of the focus is on Verizon.

Due to the timing of AT&T's rate hike relative to the predicted launch of the next iPhone, choosing to pay the ETF to leave AT&T requires a leap of faith. With approximately one month between the increased ETF and the expected unveiling of the next-generation iPhone, companies or business professionals anxious to get a Verizon iPhone will have to gamble on whether or not to make a move now while it's cheaper.

Doing so means going nearly a month with no phone at all, and most likely means giving up the ability to transfer any existing numbers between carriers, meaning possibly abandoning established, known mobile phone numbers for brand new ones. Prepaid mobile phones could be used as a temporary, contract-free alternative while waiting to see what Apple brings to the table, but business professionals dedicated to their smartphones may have a hard time adjusting to a feature phone--even temporarily.

Assuming a small business has 25 employees currently using AT&T smartphones--iPhones or otherwise--the cost to terminate those contracts early and walk away today would be $4375. As of June 1, that cost skyrockets to $8125, making it a much more difficult decision to switch carriers.

If the gamble doesn't pay off, and either the rumors of the death of AT&T's iPhone exclusivity are once again exaggerated, or a Verizon iPhone is announced, but not immediately available, you still have some options. You can purchase the Motorola Droid from Amazon for only $20, or the newer, more impressive HTC Droid Incredible for $150--both very capable Android smartphones.

Both of those deals require the obligatory two-year contract with Verizon, but if you don't like AT&T's network performance, voice quality, or customer service perhaps it's a small price to pay to switch carriers.

The clock is ticking. Its now, or never--or at least now, or it will cost you twice as much.

You can follow Tony on his Facebook page , or contact him by email at tony_bradley@pcworld.com . He also tweets as @Tony_BradleyPCW .

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