AT&T Mobility agreed to settle a class-action suit that alleged its older, flat-rate early termination fees (ETF) were illegal, and will pay out $18 million as a result.
The case, filed in U.S. District Court in New Jersey, is one of many that have been filed against carriers over ETFs. Many operators, including AT&T, switched to a pro-rated ETF system in 2008, under which the fee decreases over time. In a statement, AT&T said it "strongly denies any wrongdoing, but has agreed to settle to avoid the burden and cost of further litigation."
The class affected includes AT&T customers (or those of its predecessors, such as Cingular), who were charged a flat-rate ETF between Jan. 1, 1998 and Nov. 4, 2009, or subscribers whose contract included a flat-rate ETF at any time after Jan. 1, 1998. It is not clear how the settlement fund will be divided.
Such settlements are not uncommon in the industry; last year Sprint Nextel settled a similar case for $17.5 million.
Interestingly, the AT&T settlement came on the same day the FCC sent letters to the Tier 1 carriers and Google asking them to detail and explain the rationale behind their ETF policies.
FCC questions carriers, Google on ETF policies
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