Sprint loses out in termination fee ruling

30 Jul 2008

US cellular operator Sprint Nextel has been ordered to pay USD73 million in refunds for disputed early termination fees (ETFs). A judge in California made a preliminary ruling in favour of Sprint customers who were charged to end their contracts early. Consumer groups claim the use of ETFs unfairly prevents a customer from switching networks, but Sprint argues that the fees are necessary to cover part of the cost of handset subsidies. The cellco says the latest ruling is not definitive and that it has two weeks to respond before a final decision is made. The Federal Communications Commission (FCC) is considering whether to introduce a nationwide policy for the use of ETFs. In the meantime, many operators have opted to make their fees more flexible to avert similar lawsuits in the future.