Sprint pro-rates early termination fees, but…

A year after promising to do so, Sprint has finally started pro-rating its early termination fee (ETF), the penalty of up to $200 that it charges when subscribers cancel their service before the end of new or renewed 24-month service contracts signed on November 2 and after—but not before that date. Sprint blamed the delay on its old billing system—now updated—which couldn't handle pro-rating.

That brings to four the number of major cellular carriers who now reduce such fees, depending on how far subscribers are into their contract before quitting. The fees start at $175 to $200. That leaves Alltel (which is on track to be acquired by Verizon) as the only big brand that doesn't pro-rate, despite its pledge last year to do so. Spokespeople for that Arkansas-based carrier did not return our repeated phone calls.

Sprint says its pro-rating is "one of the industry's most customer-friendly." Our analysis found that to be essentially true. Among pro-rating policies for two-year contracts, Verizon gives consumers the best deal, with an average monthly ETF exposure of $110. AT&T and Sprint were only a few bucks behind at $115 and $117, respectively.

T-Mobile's and Alltel's policies were considerably more customer-unfriendly. They expose customers to an average monthly termination fee of $166 and $196. (See table below.)

If only Sprint stacked up as well in other aspects of customer service. Alas, a new Ratings of customer service for cellular service providers (available to subscribers) based on a survey by the Consumer Reports National Research Center, reveals that Sprint is among the worst companies for customer service. Along with AT&T, the company scored below average on five of seven aspects of customer service, based on responses from tens of thousands of ConsumerReports.org subscribers. The full Ratings of cell phone service, including scores of connectivity and overall satisfaction in 23 metro areas, is available now to subscribers. We've also recently updated our Ratings of cell phones and smart phones, also available to subscribers, and posted new advice on selecting a carrier and a phone, available for free.

Cell phone termination fees: A comparison

For 24-month contracts

If you cancel when you're in this month of your contract...

You'll pay this early termination fee (ETF) if your wireless service provider is:

	Verizon	AT&T	Sprint	T-Mobile	Alltel
1st	$0*	$0*	$0*	$0 or $200*	$0 or $200*
2nd	$170	$175	$200	$200	$200
3rd	$165	$170	$200	$200	$200
4th	$160	$165	$200	$200	$200
5th	$155	$160	$200	$200	$200
6th	$150	$155	$190	$200	$200
7th	$145	$150	$180	$200	$200
8th	$140	$145	$170	$200	$200
9th	$135	$140	$160	$200	$200
10th	$130	$135	$150	$200	$200
11th	$125	$130	$140	$200	$200
12th	$120	$125	$130	$200	$200
13th	$115	$120	$120	$200	$200
14th	$110	$115	$110	$200	$200
15th	$105	$110	$100	$200	$200
16th	$100	$105	$90	$200	$200
17th	$95	$100	$80	$200	$200
18th	$90	$95	$70	$200	$200
19th	$85	$90	$60	$100	$200
20th	$80	$85	$50	$100	$200
21st	$75	$80	$50	$100	$200
22nd	$70	$75	$50	$50	$200
23rd	$65	$70	$50	$50	$200
24th	$60	$65	$50	The lesser of $50 or monthly plan fee	$200
Average monthly ETF exposure	$110	$115	$117	$166	$196

For 12-month contracts

If you cancel when you're in this month of your contract...

You'll pay this early termination fee (ETF) if your wireless service provider is:

	T-Mobile	Verizon	AT&T
1st	$0 or $200*	$0*	$0*
2nd	$200	$170	$175
3rd	$200	$165	$170
4th	$200	$160	$165
5th	$200	$155	$160
6th	$200	$150	$155
7th	$100	$145	$150
8th	$100	$140	$145
9th	$100	$135	$140
10th	$50	$130	$135
11th	$50	$125	$130
12th	The lesser of $50 or monthly plan fee	$120	$125
Average monthly ETF exposure	$130	$133	$138

Note: *AT&T and Verizon provide 30-day trial periods in which you may cancel without incurring termination fees. T-Mobile provides only a 20-day trial period (30 days in California). Alltel provides only a 15-day trial period.

More on those termination fees: The fee charged by Sprint actually doesn't drop at all during the first five months of the contract. Then it dives at a fast $10-per-month clip. But when the fee hits $50 in the 20th month, pro-rating stops again until the contract runs out. Thus, we'd argue that Sprint provides monthly pro-rating during only two-thirds of the contract term. Nevertheless, Sprint's pro-rated termination fees are lowest of the five carriers in the second year of the contract—although T-Mobile matches Sprint's $50 fee in the final three months.

Of course, you may be able to beat the fees altogether by carefully testing out the service quality over the initial trial period, during which time new customers can cancel without paying an early termination fee. AT&T, Sprint, and Verizon have the best trial periods—30 days—while T-Mobile's is only 20 days (30 in California) and Alltel's is a miserly 15 days.

—Jeff Blyskal

Comments

[Paul Eng]

To Chuck:

Thanks for your comment regarding our cell phone services story. But just to clarify, we did rate cell phone service in Houston. However, as we mentioned in our report, our Ratings of cell phone service providers is based on results from subscriber surveys. And at the time we conducted these surveys in the Houston area, the city was dealing with Hurricane Ike.

As such we had to separate the survey results for the city of Houston. More information--and the Ratings for cell service in the Houston area can be found here:

Houston, you had a problem
http://www.consumerreports.org/cro/electronics-computers/phones-mobile-devices/phones/cell-phone-service-providers/cell-phone-service/help-on-wheels/cell-phone-service-help-on-wheels.htm

Please note: You must have a ConsumerReports.org subscription to access the above link.

--Paul Eng
Web Senior Editor, Electronics

[Chuck]

Just read CU article on cellphone service. Amazing! The third largest city in the nation is not covered in the listing by city.

Maybe CU should consider adding Houston to the list. They might be considered as a replacement for Nonesuch, Ia.