Two former customers have filed a lawsuit against Qwest Communications seeking to end early-termination fees for Internet subscribers. The suit is one of the first challenges to the practice of early-termination fees as it applies to broadband services.
Early-termination fees have come under scrutiny by consumer groups and lawmakers, who say they lock in customers and discourage competition. Providers say they must hold customers to long-term agreements in exchange for offering aggressively priced service plans. Qwest's termination fees are part of its "price for life" plans, which cost $30 or more a month for broadband.
In recent months, customers have fought similar charges for early termination of cellphone contracts with wireless carriers. In July, a California judge ruled that Sprint must refund about $73 million in early-termination fees, and Verizon Wireless settled a set of early-termination lawsuits for $21 million.
According to the Qwest complaint, Robin Vernon of Auburn, Wash., and Rory Durkin of Anoka, Minn., were each charged $200 when they canceled their high-speed Internet service.
Qwest, based in Denver, markets its price-for-life plans as requiring a two-year agreement, but customers don't sign a contract, said Michael Lieder, an attorney at one of the firms representing the plaintiffs. The fee applies regardless of when they cancel service during those two years. Such a lengthy term requires a written agreement, and the fee isn't a good-faith estimate of what the real damages are, he added.
"Qwest simply imposes a $200 charge whether someone ends service on month one or month 23," Mr. Lieder said. "We believe that it just picked the $200 amount in an effort to dissuade consumers from switching service if they find a better service."
Unlike the wireless suits, said Chris Murray, senior counsel at Consumers Union, in Qwest's case, "the fig leaf justification that the wireless carriers have -- subsidized handsets -- doesn't really apply." Customers canceling their wireless service still have their cellphone, whereas former broadband subscribers don't have that, he said. (info from The Wall Street Journal)