Astounding: Canceling iPhone service will cost $175

I seriously don’t understand this. According to this article in the Boston Globe, Cingular (now AT&T, again) is going to charge an early termination fee of $175 if you cancel your service agreement before the 2 years are up. Um WHAT?!

See in the United States, we pay nearly nothing for most cell phones. This is because they are ‘subsidized’ by the telcos such as Verizon, AT&T, T-Mobile, and the like. The early termination fee is charged if you leave before your contract is up to cushion the telco from losing money on the subsidy to you. But since AT&T is NOT subsidizing the cost of the iPhone (hence the $499 and $599 price tags) – they HAVE NO RIGHT to charge an early termination fee.

So I guess the moral of the story is – if you chose to buy an iPhone, you better know you’re going to like it!!!

PS As I’ve said before, I wish we had the European model of cell phone usage. They purchase their phones at full price (even if it means paying $200-400 per device) and get pre-paid SIM cards for GSM phones. When I get released from my service contract with verizon, I’m going this route. I’ll find some cool phone I like and just go pre-paid. Service Agreements suck