AT&T Raises Early Termination Fee For iPhone; Is It Losing iPhone Exclusivity?

ATT to raise early termination fee for iphone

AT&T has announced significant changes to its Early Termination Fee policy that will see ETF for higher end devices, including smartphones like the iPhone, nearly double from $175 to $325. 

Announcing the changes in a recently published "open letter", the company has noted that the changes shall only apply to new devices purchased on or after June 1 2010.

While the higher end devices like the smartphones and netbooks will see an increase in ETF, "basic and quick messaging" lower end phones will see a drop in ETF from $175 to $150.

However, the actual fee paid by customers severing their contract will be on a prorated basis. Consequently, the ETF on lower end devices will be reduced by $4 for every month that the user has stayed with the carrier. Similarly, the ETF on iPhone and other higher end phones will be reduced by $10 for each month that subscribers remain with Ma Bell. The Early Termination Fee may no longer apply if the subscribers' contractual period is over.

AT&T's new ETF policy is expected to be rolled out just a week ahead of Apple's Worldwide Developers Conference. As you may be aware, Apple is expected to launch the next generation iPhone during the event. Consequently, AT&T's move to drastically increase the ETF on smartphones like the iPhone has given rise to speculations over an imminent launch of a CDMA iPhone.

A lot of rumors in the past few weeks have indicated that a CDMA iPhone on Verizon could be launching in the next few months. 

AT&T CEO had commented earlier in the week that he was not concerned of losing iPhone exclusivity as there were a few things that will disincentivize a majority of AT&T customers from fleeing the network.

The change in ETF for AT&T subscribers could be another disincentive for subscribers who may want to jump ship to Verizon when the CDMA iPhone launches. The carrier has however refuted claims that the increase in ETF for smartphones was targeted at any particular device. 

It is also important to note here that AT&T's new ETF charges for smartphones is pretty close to the $350 charged by Verizon for customers terminating their subscription. 

With a CDMA iPhone rumored to launch only in September of this year, will you be ready to hold back on the purchase of iPhone 4G until then? What you think about AT&T's move to raise early termination fee for the iPhone? 

[via AT&T Media Release]