On Monday AT&T announced a new plan for early termination fees starting on May 25th. Each month of the one or two-year contract, the termination fee will be lowered by US$5.00. AT&T also reiterated the ways customers can avoid long-term contracts and early termination fees altogether.

"Beginning on May 25, the company’s new and renewing wireless customers who enter into one- or two-year service agreements will no longer be required to pay a single, flat early termination fee. Instead, that fee, which is $175, will be progressively lowered by $5 during each month, every month, for the term of the contract. (The single, flat ETF will continue to apply to new and renewing customers who enter into one- or two-year service agreements prior to May 25.)," AT&T said.

The company reiterated the ways customers can avoid long term contracts and early termination fees:

• Buy a phone at full price and go on a month-to-month service plan.
• Bring your own compatible GSM device. With this option, you can buy a SIM (subscriber identity module), slip it into the back of the phone, and select a month-to-month service plan.
• Choose one of AT&T’s GoPhone prepaid wireless plans.

Even over 24 months, the early termination fee doesn’t drop to zero, so this is not a proration. The net effect is to encourage customers late in the term of their contract to complete it. The U.S. Congress has been putting these ETFs under scrutiny, and AT&Ts; announcement confirms that they see the handwriting on the wall regarding flat-rate ETFs.

AT&T’s Mark Siegel told iPO that the Apple iPhone, however, requires a two year contract.