What it actually means
Most UK home and business broadband contracts run for a minimum term, commonly 12, 18 or 24 months. The provider invests up front in the install, the router and the customer acquisition cost, then earns that back over the life of the contract. If you cancel partway through, the early termination fee covers the months you committed to but haven't paid.
The sum is straightforward. Take the number of full months left in your minimum term, multiply by your committed monthly spend, then subtract any wholesale or VAT costs the provider no longer has to pay once your line is ceased. Ofcom requires this to be disclosed in your contract summary at sign up, and under One Touch Switch it has to be shown again in the Switching Information Statement before you confirm a move. Two things commonly cause shock at exit: customers who don't realise they're still in minimum term, and providers that quietly removed promotional discounts in year two so the monthly figure used in the calc is higher than the customer remembers paying.
At home
What this looks like in the house
If your provider has stopped fixing the line and you want out, finding a chunk of money on the final bill stings. The number itself isn't usually the surprise, it's the timing. You moved because something broke. The fair test isn't whether a fee exists, it's whether the contract was sold to you honestly in the first place and whether the price you're being charged for the remaining months matches the price you actually thought you were paying.
In business
What this looks like at work
For a business an ETF is a budget line, not a shock, as long as it's been disclosed properly. The risk is signing a 36 month deal at a headline rate, getting a service that's no longer fit for purpose 18 months in, and discovering the exit is priced against a higher list rate rather than your contracted rate. Before you sign anything, get the exit figure in writing for month 6, 12 and 24 so you know what flexibility you're actually buying.