iPhone Termination Fee Making Lawmakers Upset

Reading Time: < 1 minute

Apple’s iPhone has enjoyed favorable reviews since its recent debut, but it got some criticism on Capitol Hill in Washington this week. AT&T’s iPhone termination tee is in particular making everyone upset.

The Apple phones, which cost between $500 and $600—are usable only on AT&T Inc.’s wireless network and will remain that way until 2012. Even though the phones become expensive paperweights if customers quit AT&T’s wireless plan, the company will still charge a $175 early termination fee, said Rep. Edward J. Markey, D-Mass., chairman of a House subcommittee on telecommunications and the Internet.

Markey described the phone as a “Hotel California service. You can check out any time you like, but you can never leave—you’re stuck with your iPhone and you can’t take it anywhere.”

Timothy Wu, a law professor at Columbia University and commentator on technology issues, described the cell phone industry as “spectrum-based oligopoly” where customers have given up their property rights.

“Imagine buying a television that stopped working if you decided to switch to satellite,” Wu said. “Or a toaster that died if you switched from Potomac Power to ConEd.”