Verizon Wireless to Prorate Cancellation Fees

Targeting a top gripe by cellphone users and breaking ranks with its industry, Verizon Wireless plans to prorate the fee it charges subscribers who break a contract so they only pay an amount proportional to the time left on their agreements.

The change in the early termination fee will be implemented this fall for new customers and Verizon Wireless subscribers who sign a new contract, the company said Wednesday.

The company, owned jointly by New York-based Verizon Communications Inc. and Britain’s Vodafone Group, also said it was addressing another customer frustration by enabling existing subscribers to upgrade to a new handset at the same steep discounts offered to lure new customers.

U.S. wireless companies, whose subscribers are trapped by contracts and early termination fees, typically offer much smaller savings on upgrades to customers under contract.

Wireless cancellation fees have long been a sore point among consumers, provoking lawsuits and legislative proposals to prohibit and cap them.

This month in California, a state court decided to allow a class-action suit seeking to recover early cancellation fees from Verizon Wireless and Sprint Nextel Corp., according to the seniors advocacy group AARP, which is providing legal assistance for the plaintiffs.

About 50 million of Verizon Wireless’ 53 million subscribers are under contract, and nearly all would face a fee of $175 if they decided to change carriers or close their accounts before their contracts ended.

“The number of complaints on this issue is the single largest that our customers have,” Chief Executive Denny Strigl said. “It’s a legitimate complaint: If they leave in month one or month 23, they pay the same charge.”