DailyTech recently reported that Verizon Wireless was raising its early-termination-fee on advanced devices (smartphones) from the previous fines of $175. The move was largely in response to resales of the BlackBerry Storm 2 and Blackberry Tour purchased under the Buy-One-Get-One (BOGO) promotion. Customers buying one of the phones got another for free — and that phone was worth more than current $175 ETF. Customers were getting the second BlackBerry, canceling its plan, selling the phone, and pocketing a $100 or more difference.
The ETF bump, though, was unfortunate for the average consumer who saw the price of cancellation at the one-year market jump from $175 or less to $230. The decision led to an U.S. Federal Communications Commission inquiry into why Verizon was sticking it to its customers.
Verizon has at last responded and comments, “The higher (early termination fee) associated with Advanced Devices reflects the higher costs associated with offering those devices to consumers at attractive prices, the costs and risks of investing in the broadband network to support these devices, and other costs and risks.”
Observers note that Verizon’s ETFs are the highest in the industry, with typical fees from Sprint, AT&T, and T-Mobile starting at between $175 to $200 and being pro-rated over the course of the contract. According to a recent Government Accountability Office report, ETFs were among the top four complaints submitted to the FCC between 2004 and 2008.
Carriers justify the fees pointing to the fact that they offer discounted phones to consumers when the consumer purchase a plan. Aside from recouping those costs, Verizon says its hearty termination fee helps cover the company’s advertising expenses — perhaps helping fund its latest attack commercials against AT&T.
The FCC is also investigating another complaint against Verizon. Customers have complained that they were charged a $1.99 fee for inadvertently accessing Verizon’s Mobile Web service. Verizon claims that the service, included on most of its phones, does not fine users for “simply launch[ing] the internet browser and land[ing] on the Verizon Wireless Mobile Web homepage.” It says customers that feel they have been unjustly charged can contact customer support and ask for a refund.
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