In a landmark decision on carriers' early-termination fees, a California court ruled against Sprint Nextel Corp., which may have to pay $73 million in damages.

The ruling coincides with an investigation on carriers' early-termination policies run by the Federal Communications Commission. Verizon Wireless reached an out-of-court $21 million settlement for a similar lawsuit, and that company, AT&T and T-Mobile have all recently adjusted their early-termination policies.

"The ruling sends a pretty strong -- though still appealable -- message to both consumers and operators that the days of high-ticket termination fees may be numbered, for Sprint and others," said Nic Covey, Chicago-based director of insights at Nielsen Mobile.

"With this ruling, it's clear that carriers will need to continue thinking critically about the early termination model," he said.

Carriers charge customers early-termination fees when they break their wireless contract before it ends to jump to another carrier.

In general, the early-termination penalties range from $150 to $250.

Each of the leading carriers has felt the regulatory and judicial heat around termination fees.

To date, the situations have been disparate. But the Sprint ruling draws attention to the macro nature of this issue for both consumers and businesses.

"While carriers need to think about how to avoid or recoup the costs of their subsidized devices when subscribers leave, they also need to think about the final impression they're leaving with the switchers," Mr. Covey said.

"Some subscribers leave because they don't like you, but mostly they leave because they don't get reception in the one place they need it, because someone else has the deal of the month or to consolidate with their family, and carriers don't want to make enemies of them," he said.

Carriers, however, claim to be in a bind, because they often attract subscribers by offering the latest handsets at a steep discount.

"That said, consumers -- and possibly the courts -- need to understand that today early termination fees are the cost of highly subsidized mobile devices," Mr. Covey said.

"Consumers don't want to pay a $200 early termination fee, but I bet they'd prefer that over a full mark-up on their mobile device when they go for a new contract," he said.

While the direct impact of the court ruling is still to be determined, it is clear that the economics of the wireless space will continue to evolve as carriers, manufacturers and consumers test the limits of their present arrangements.

"This ruling is further cause for all of the carriers to carefully reconsider their current termination plans," Mr. Covey said.

"The more creatively carriers can deal with the very real challenge of those cutting out early, the more regulation-proof they become and, hopefully, the more appealing their services look to consumers," he said.

"Since early-termination fees won't go away over night, I expect we'll see better consumer education about the need for and structure of such charges," he said.

Last month, T-Mobile changed its early-termination policy to a sliding scale, reducing its fees by as much as $100.

In 2006 Verizon Wireless became the first major carrier to switch to a sliding scale of early-termination fees, and AT&T has matched its policy for contracts signed after May of this year. However, both carriers' fees are more than what T-Mobile now charges.

Up until now, Sprint has held firm to its $200 early-termination fee, although it is reportedly reconsidering its policy. In the wake of this ruling, it may be forced to.

Some devices may make the industry more susceptible to early termination than others. Often the lure of a new carrier-specific device, such as Apple's iPhone 3G, causes early-adopters to jump ship to get the latest technology.

"When you launch a premier device and it's only available on one carrier, you introduce a risk for subscribers cutting and running that might have been avoidable," Mr. Covey said.

"Carriers could reduce the incentive to port in two ways: they could support a more open device market where exclusivity is less of a focus, or they could simply peddle new devices that aren't so darn enticing," he said.

"Let's hope they choose the former."