Bound by Your Broadband

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There's no love lost between many consumers and their mobile phone providers, in part because of hefty fees for canceling the service before the end of a contract. You might now be just as financially bound to your broadband Internet service provider.

A project of Consumers Union (publishers of Consumer Reports) that focuses on technology, communications, and media surveyed some major broadband service providers. The group, Hear Us Now, found that some providers have started attaching early termination fees to their contracts.

Are you stuck?
As of late March, the project concluded that:

• AT&T (NYSE: T) (including SBC and BellSouth) charges a $99 early termination fee. Customers who agree to an annual contract get one month of free service.
  
  
• EarthLink (Nasdaq: ELNK) charges a $149 early termination fee on a one-year contract for DSL service.
  
  
• Qwest (NYSE: Q) charges a $200 early termination fee for early cancellation of a two-year contract. Consumers who sign up for a two-year contract avoid future price increases if they keep their service with Qwest.
  
  
• Verizon (NYSE: VZ) charges a $69 early termination fee for FiOS fiber-optic broadband service and $79 for early cancellation of DSL service. Customers can cancel within the first month without paying the penalty. Customers with yearlong contracts get lower rates -- about $5 less per month for FiOS and $2 to $8 less for DSL service.

The survey found that some other companies, including Cablevision (NYSE: CVC), Charter (Nasdaq: CHTR), and Comcast (Nasdaq: CMCSA), do not charge early termination fees. All offer bundled service, which may include phone and television service, at a discount rate. Customers of all three companies would be subject to higher prices if any of the bundled services are dropped within the term of the contract.

Get out of jail ... not so free
Someday, we're all going to have to go to law school to understand our tech service contracts. In the meantime, early termination fees make it difficult for savvy shoppers to leave a provider for better rates. Find a better broadband deal before your contract expires, and you can almost guarantee that it won't be worth the money to switch. In fact, it might end up being more costly.

That means you'll have to take some extra precautions when you shop around for Internet service. Put "early termination fees" on your list of questions, and be sure to also check on these other factors:

• Make sure the company's service is available in your area. The provider will probably check this for you before proceeding.
  
  
• Find out about charges for any equipment you need to connect to the Internet. Some companies rent their connection equipment. Also find out whether you'll need to purchase any extra equipment on your own to make the service operable.
  
  
• Ask about installation fees and options for do-it-yourself installation, if you'd prefer.
  
  
• Ask about the monthly rate. Some companies offer different rates for different services, so make sure you understand the service offered before leaping for the lowest-priced option.
  
  
• Find out what kind of security features might be included with the service, and whether they cost extra. Ask, too, about the availability of tech support.

You can get much more advice about being a savvy consumer by surfing over to the Motley Fool's Green Light newsletter. You can take a risk-free trial for 30 days, and we promise there's no early termination fee.

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Fool contributor Mary Dalrymple does not own stock in any company mentioned in this article. She welcomes your feedback. The Motley Fool has a disclosure policy.