AT&T will raise the fee for smartphone users who attempt to break their two-year contracts from $175 to $325, starting June 1. At the same time, termination fees for users of regular smartphones will decline slightly, from $175 to $150. The new fees will apply to new contracts. The move comes as Apple, whose iPhone remains the most popular smartphone on AT&T's network by mind share and revenue, reportedly prepares a next-generation smartphone to go along with its upcoming iPhone OS 4. In addition, AT&T plans on carrying a number of smartphones running Google Android and Windows Phone 7.
AT&T plans on raising the fee for smartphone users who break their
two-year contracts, from $175 to $325, starting June 1. That fee will gradually
shrink over the course of the user's contract, by $10 per month, and apply to
At the same time, the termination fee for purchasers of regular cell phones
will actually decline, from $175 to $150, with a $4 reduction for every successive
month the user stays under contract.
A similar move by rival Verizon in late 2009 attracted protests from users.
AT&T spokesperson told The Wall Street Journal
May 21 that the
raising of fees was a "fair approach."
The news comes as Apple, whose iPhone is AT&T's most successful
smartphone, prepares for yet another summer of smartphone-related releases. In
addition to its upcoming iPhone OS 4, which comes with new features such as
multitasking, the company is also rumored to have a next-generation iPhone in
the works; over the past few weeks, two devices purported to be prototypes
leaked into the wild, with one of them dissected by tech blog Gizmodo.
The iPhone is something of a double-edged sword for AT&T. Although the
device has boosted the carrier's popularity and helped drive the carrier's
overall revenues, many of its users have almost made a sport of complaining
about the network's supposed inability to handle their thirst for bandwidth.
AT&T has countered these complaints by insisting that it has been heavily
investing in its network infrastructure.
In cities with large numbers of iPhone users, such as San
Francisco and New York,
AT&T has been reportedly at work on improving its 3G Voice Composite
Quality Index, claiming that it improved that metric by 21 percent in San
Francisco for the fourth quarter of 2009. In addition,
the carrier claims an expansion of its 3G coverage by 4,100 sites, or 360
While the iPhone seizes most of its smartphone spotlight, AT&T has other
smartphones on offer, including the Palm Pre Plus and the Pixi Plus. The
latter will make its AT&T debut June 6
. Additionally, the carrier
introduced the Motorola Backflip, a device running Google Android 1.5, in
March; five Android phones are eventually planned for rollout. AT&T
executives have also indicated that two smartphones running the Windows Phone 7
operating system will make their debut on the network at an unannounced date.
In the face of the increased demands on bandwidth, AT&T is apparently
considering a tiered pricing system that forces more data-intensive users to
pay more. "For the industry, we'll progressively move toward more of what I
call variable pricing so the heavy consumers will pay more than the lower
consumers," AT&T CEO and President
Randall Stephenson told the audience during March's Morgan Stanley Technology,
Media & Telecom Conference.