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Understanding Early Termination Fees

Reviewing airtime service agreements can be daunting with specific details, dates, and time lines detailed in the terms and conditions.  Whether the service agreement is with Inmarsat or Iridium, for Satellite Phones or BGAN’s, the Network Innovations team deciphers Early Termination Fee (ETF) details helping you to navigate airtime agreements a little easier.

Early Termination Fees (ETF) for most Inmarsat and Iridium products are charged based upon the terminal’s monthly fee.  The amount charged was traditionally the remainder of the commitment on the terminal in question.  If a terminal had 8 months left in the commitment, it would be charged for 8 months’ worth of fees if deactivated for their ETF.  Most Inmarsat “Land-based’ products, like BGAN, work this way.

For some Inmarsat products, the ETF is often capped at a maximum number of months (usually set to 3 months, 6 months or 9 months, depending upon the commitment).  A FleetBroadband plan with a 12-month commitment is often capped at 3 months.  When this occurs, it means that if the terminal is deactivated 5 months into a 12-month commitment, the customer only needs to pay 3 months’ worth of fees instead of the remaining 7 months.

Some Iridium products like Certus have a “Flat Fee ETF”.  When a “Flat Fee ETF” applies, the same ETF will be charged whether the terminal is deactivated 8 months’ early or 1 day early.  The knowledge of when exactly the terminal was activated is critical when deactivating it as the charges can be significant (up to ~6 months’ worth of fees on a 12-month commitment).

One more critical point, with Iridium products, the Early Termination Fee applies to deactivations, downgrades and upgrades.  For new Certus Land plans, customers should focus on plans with shorter commitments (3 months) for an initial trial rather than activating the 12-month commitment plan.  After the initial commitment is over, the usage level has been established and the service can be moved to the best plan based upon usage.  On thing to consider, using a smaller plan first means service cannot upgrade without an early termination fee until the initial commitment is completed.  Contact us with your specific questions.