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It is about time that this happens, Early termination fees are NOT a benefit to the consumer. I would have to guess this is an effort on AT&T’s part to forestall some litigation regarding the iPhone and contract termination. The iPhones were sold at full price and required a contract that included an early termination fee.

Common use of the early termination fee is to offset the discounted phone price on most contracts.  Hopefully, this policy will be picked up by other providers.

NEW YORK (Reuters) – AT&T Inc (T.N: Quote, Profile, Research), the biggest U.S. mobile service, said on Tuesday that it will reduce some fees for customers who exit phone contracts before they are completed, in an effort to offer users more  flexibility.

AT&T said customers who choose to exit their contracts early will no longer be required to pay a flat early termination fee, but instead will pay based upon the amount of time that has passed since the contract was signed.

In addition, existing customers who change their level of service will not be required to extend their current agreement or sign up for a new one.

Link: http://www.reuters.com/article/technologyNews/idUSWEN168820071016?feedType=RSS&feedName=technologyNews&rpc=22&sp=true