Hi all,

Thought I’d start a thread on early termination charges (ETC) for Vodafone customers and how we work it.

 First of all, why do we have ETCs?

Basically it’s a cost recovery mission. You Choose customers (for example) are signed to a contract because they’re offered either a free handset a discount off a handset or free minutes or add ons. The cost of the plan is worked out to take that into consideration, so early termination of that plan means we have to recover some costs.

There are three ways to terminate your plan.

First of all there’s early termination. This happens when you quit your plan and leave Vodafone entirely. The ETC is based on a sliding scale depending on how long you have left on your plan and what plan it is, the general principle is the closer you are to the end of the contract the lower the ETC as we have recovered the majority of our costs by then.

Then we have the early re-sign process.  Which has a similar sliding scale depending on the length of the original contract, i.e. If you’re within two months of the end of your 12 month YC contract you can re-sign (either to that plan or to another Vodafone plan) at no cost. If you’ve got MORE than two months left, however, again there’s a fee based on how long you have left and what plan you were on originally. On a 24 month YC contract no resigns are available in the first 12 months, a fee of $150 for 13- 18 months and free after 18 months. Again, this is to recover the cost associated with the original plan and to sort everything out before you move to your new plan.

Finally there’s the plan transfer fee. If you’re moving from a higher plan to a lower plan there may be a fee associated. That’s because, as with the other situations, you have received a subsidy of some kind on the higher plan based on your higher value. Moving to a lower plan means we reassess that value and bill accordingly.

The site that contains all the detail on this is:

http://www.vodafone.co.nz/personal/plans-services/plans/ending-your-contract/

 This isn’t something that only Vodafone does. Most telcos around the world charge early termination charges of some kind or another. I realise there are some out there that believe no telco subsidises handsets any longer but that simply isn’t true – we do subsidise them right across the board.  Effectively by signing to an On Account plan you are signing a binding contract with clearly set out terms and conditions which give both parties rights and responsibilities. Vodafone is in fact very flexible in interpreting the responsibility of customers to see out their contract term, allowing resign before the end of the term in all cases.

If you want to avoid ETCs there are three ways to go about it: either wait until your contract has expired,  sign up for Prepay in the first place or On Account Motormouth. Motormouth and Prepay customers don’t receive subsidised handsets and therefore don’t pay ETCs.