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Six Points to Negotiate a Market-leading ETF Clause

  • TC2 Blog
  • 4/25/2015
  • Dorothy Hildebrandt

Early Termination Fees, or ETFs, are ubiquitous in wireless contracts. As long as device costs remain so high that they require carrier subsidies, ETFs to recoup these subsidies over less than a full term are probably a necessary evil. But have you looked at your ETF clause in your contract recently? Has it changed in the past 2-3 years? Chances are the fee has at least been increased.

Historically, the major carriers charged $175 ETFs. If you still have this flat rate in your contract, you are very fortunate! But chances are it’s been increased by a recent amendment. AT&T now charges $325 for a terminated smartphone, while Verizon and Sprint are higher, charging $350 per smartphone. This makes T-Mobile look pretty attractive with their “no ETF” campaign, right? Not unless you want to start paying full price for unsubsidized devices (think $600+ for that new iPhone). Tablets and data cards have their own ETF fee ($150-$175 per terminated device), and machine-to-machine devices are usually $50 per terminated device.

Early termination charges can clearly become a significant and unwelcome expense due to employee turnover, changes in your workforce, downsizings and other business changes. So, what best practices can you follow to minimize exposure to ETFs while maximizing flexibility to give your users the latest devices?

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