The American Spectator

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The Public Policy

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STILL, CRITICS allege that early termination fees are anti-competitive, because they make it harder to switch carriers. That ignores the intense competitive effects that the fees have on innovation.

When something is cheap, people buy more of it. By making the upfront cost of phones as inexpensive as possible, early termination fees vastly increase sales.

That's why companies are racing furiously against each other to come out with new and better phones. A new widget that your competitor doesn't have can bring in millions of dollars of new contracts.

If early termination fees reduce competition in the cell phone marketplace, then why is there so much of it?

Don't expect to see an answer in Judge Sabraw's next verdict.

The next time someone grumbles about early termination fees, tell them what the fees do to make phones affordable and to ensure a competitive, innovative marketplace. And remind them to read that contract before signing it.

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Business, Law