There are two simple options the cell phone companies could employ to make the ETF more reasonable and fair to consumers.
Option 1This option involves a bit of calculation. The cost of the subsidy plus a reasonable profit margin (10%) = the ETF. Furthermore, the ETF is then divided by the term of the contract and for each month completed, that amount is subtracted.
|Here's an example|
|AT&T's Cost to Apple||$500|
|Phone's cost to Consmuer||$200|
|Subsidy paid by AT&T||$300|
|Amount deducted each month of a 24 month contract||$14.58|
So, let's say you complete 9 months of your contract and you've had enough. Your early termination fee would be $218.75
This option is really an extension of the firstTake the phone back. AT&T can refurbish and resell that same phone for $150. It costs maybe $50 on average to refurb the phone. So, give the consumer a $50 credit for the phone, which comes off the top of the ETF. Additionally, the phone company gets to make another $50 on the phone.
This isn't rocket science.