Wireless industry stunted by Supreme Court decisions on arbitration, ETFs
Class-action litigation on early-termination fees to move forward
October 7 2008 - 1:08 pm ET | Jeffrey Silva | RCR Wireless News
The Supreme Court dealt the wireless industry a setback by declining to review lower court rulings that found T-Mobile USA Inc.’s arbitration clause in service contracts do not prevent subscribers from lodging class-action lawsuits against the No. 4 mobile-phone carrier.
Opening a new term, the high court also let stand an Illinois appeals court decision affirming class certification of a 48-state early-termination fee class-action lawsuit against Sprint Nextel Corp. As a result, class-action complaints against T-Mobile USA and Sprint Nextel will move forward.
In a separate action on a stand-alone case, the Supreme Court affirmed a decision by 11th U.S. Circuit Court of Appeals to keep intact an arbitration award involving AT&T Mobility in a case in which it was alleged the carrier illegally disclosed a teenager’s mobile-phone number.
Last week, a federal judge in New Jersey ruled the Federal Arbitration Act preempts state law in a class-action lawsuit unsuccessfully brought against Verizon Wireless.
The Supreme Court’s actions come as the wireless industry lobbies the Federal Communications Commission to create a national ETF policy.
October 14, 2008 06:35 pm
EFT's only really hurt the dealer that sells the equipment. We are forced to pay a premium for the equipment. Sell at a discount, to make commission. Yet if the customer deactivates early. We are charged a deactivation fee (our commission) we loseall the money on the phone. The carrier still gets to keep the ETF. So who is the loser..... even our supplier doesn't take the hit.
October 7, 2008 01:29 pm
The wireless industry never agreed to be a "not-for-profit." Termination fees are abound in many other services and no one screams "class-action." I don't like them, they are constricting, they are costly per line but they are the cost of business. If you could get a laptop from Toshiba for $200 instead of the $1200+ you normally pay in exchange for signing up for a monthly service plan of some sort, the trade off is monthly recurring revenue with a huge subsidy. This is the same thing.What I think is unethical is to have indirect agents eat the subsidy out of their commission and then still hold the customer in contract to the carrier. The indirect agents eat the phone loss right on the front end but the customer is still under the same obligation to pay the termination fee and the indirect agent will be out the phone loss and the commission in the event of a charge back.
October 7, 2008 01:29 pm
I agree JonS!!!
October 7, 2008 01:29 pm
To me Cellular is the last frontier, ie still the Wild Wild West. As a Cost Control Expert who works in this field daily. I am surprised at what happens in this unregulated industry. One carrier is billing at approximately 30% more minutes than actually used across the board. I have been in meetings to resolve billing issues where carriers said, "pay the bill or have service shut off" (we won that one eventually) I am almost always in favor of deregulation. In this case I am for it. For carriers to claim they have launched pro rated termination fees and 6 months later to have done nothing is wrong. Today you can pay more for a cell phone and have no contract from all carriers. The main issue is proration in month 23 the carrier has recovered the cost of the subsidy but still charges the same fee as they do for cancellation in month 1. We often found a carrier has changed technology, coverage, data speeds, pricing plans, feature pricing and availability in 24 months. Arent the carriers the ones breaking the agreement. We have an article on ways to get your carrier to agree to end your contract.
October 7, 2008 01:29 pm
More people wanting the government to save them from themselves.
October 7, 2008 01:29 pm
Yes wireless industry, what a good ideal. Allow the Federal government (remember the first word in FCC is Federal) to set the business rules for you. That will put you yet one more step towards unwanted regulation.How about this, meet the needs of your customers and your business. We all know the contracts are there to keep folks from porting off before the cost of activation and equipment can be recovered. So, offer the customer a choice. The customer can either pay a higher price for their new mobile or they can sign the contract to get a reduced rate. I believe if you give these choices, you have a better chance of NOT loosing in other court houses. If nothing else, it provides the appearence that as an industry you want to solve this issue.By the way, I do not agree with the rulings which find for the customer, they did sign a contract. However, since a persons word, and now signature mean literally nothing in the venue of responsibility, I am not shocked by the rulings.