I find it interesting that Early Termination Fees (ETFs) still exist. What is an early termination fee?
Early Termination Fee – The total fee that will be charged for early termination of a contract or agreement. If the contract has a declining rate “Early Termination Fee” refers to the initial or starting amount. (Wikipedia)
These fees are most commonly seen by the average consumer in the space of Telecoms providers (cellular, Internet, cable, etc), and are used to charge customers for canceling service before their “contract” expires. Not only that, but having just spoken with a Comcast CSR, it turns out that in the event that a customer could no longer afford their cable services, and would have to cancel their service, they would also be charged an ETF in addition!
Why charge an ETF? Well in some cases, such as cellular companies, it is to offset subsidies on cellular handsets, which “cost” much more than is actually paid by the consumer. While this practice is sketchy at best, at least it makes a certain kind of sense (however I still do not agree with it). Why do companies like Comcast charge ETFs? In short, just as many others, to discourage competition.
“Consumer interest groups have criticized such fees as being anti-competitive because they prevent users from migrating to superior services.” (http://www.nera.com/NewsletterIssue/nl_at_insights_at549_0609-FINAL.pdf)
And rightfully so. These ETFs lock in consumers to a specific vendor, and discourage the ability for the consumer to change services, should something better come along. Not only does this cripple options, but also discourages pricing competition between comparable service providers.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
-Declaration of Independence
Ah yes, the Declaration. We’re free, but at a price. Legal documents that the average consumer has not the time nor capacity to understand, attempting to limit the purchasing freedom of consumers. So as we can see in these cases, we are surely entitled to the pursuit of happiness (aka the services we would like to purchase), just at an additional price.