Klobuchar Statement on AT&T's Decision to Prorate Early Termination Fees

Press Release

Klobuchar Statement on AT&T's Decision to Prorate Early Termination Fees

Announcement comes after Klobuchar pushed companies to live up to promises

U.S. Senator Amy Klobuchar released the following statement responding to AT&T's announcement that they would begin prorating early termination fees in May. Today's announcement comes two weeks after Klobuchar demanded that three of the nation's largest cell phone companies take action to pro-rate the Early Termination Fees to help cell phone customers. Pro-rating such fees is seen as an important step to improve freedom of choice for consumers who find that their cell phone provider is not meeting their needs or expectations.

"Today's announcement is a welcome but long overdue step towards implementing mainstream, consumer-friendly values in the wireless industry," said Klobuchar. "The effective date of their decision to prorate early termination fees beginning May 25th, 2008 is especially timely as it happens to be my birthday. I wish the early birthday gift were enough, but today's action by AT&T needs to be followed by other reasonable reforms that will provide consumers the freedom of choice they deserve in the wireless marketplace. I will continue to push for the cell phone consumer ‘Bill of Rights' to help modernize the rules governing this industry and make sure consumers are getting a fair deal."

Klobuchar, who serves on the Senate Commerce Committee, introduced legislation last year - the Cell Phone Consumer Empowerment Act - that would encourage fairness, transparency and quality service in the wireless market. Among other pro-consumer measures, the bill would require wireless carriers to pro-rate their Early Termination Fees so that, at a minimum, a consumer exiting a two-year contract after the end of the first year would have to pay only half the termination fee.

Wireless providers have not pro-rated the fees in the past, but AT&T, Sprint, and T-Mobile also announced in late 2007 that they would take such action.

In a letter two weeks ago to the top executives of Sprint, AT&T and T-Mobile, Klobuchar told the companies that they must provide assurances that they will in fact begin pro-rating their fees - or if the companies have withdrawn those promises, to explain why.

"It is time for the wireless companies to adhere to the assurances they made to the American consumer and start pro-rating these fees,'' Klobuchar said.

Approximately 250 million American consumers now have cell phones, and many of those consumers are subject to Early Termination Fees as high as $200 for leaving their contracts early. Consumers Union, the independent national consumers' organization, recently reported that cell phone companies ranked 18th out of 20 industries for consumer satisfaction in its annual survey of consumer sentiment.

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