As of September 9, Sprint joins other service providers like AT&T and Verizon to increase the cost of its termination fees to $350. The move is aimed at preventing consumers from flocking to rival service plans, which may seem more attractive. However, the bigger picture is almost certainly the impending launch of the iPhone 5, which is said to be released early next month.
This is not entirely an entirely new development because each time a new line of smartphones are released, service providers are obliged to increase the termination fees to help ensure that consumers do not purchase a subsidized phone as part of a contract and then abandoning that contract for a rival service plan.
Sprint’s previous termination fee was $200 but the move to increase the fee to $350, now brings it in line with other major service providers. AT&T originally charged a $175 termination fee for the iPhone. However, last summer, the company increased the termination fee for the iPhone and other advanced devices to $325.
Verizon also increased its termination fee to $350 after it began to introduce the Droid range of mobile phones. Other service providers also have a history of hiking termination fees but one of the most controversial hikes was the $550 termination fee imposed by Google and T-Mobile, following the launch of the Nexus One. The move sparked a review from the FCC.
The rise in termination fees also indicated the shift in product management from feature phones to smart phones. Sales in smart phones have been growing faster than normal phones and it is only a matter of time before the former captures the majority of the market. Meanwhile, expect termination fees to increase as handset makers begin to churn out ever more sophisticated smartphones. However, the best way to prevent determined contract breakers would be to offer quality services. Hopefully, carriers have considered that option as well.