FCC wants answers from Verizon over increase in early termination fee
Early last month Verizon Wireless announced plans to increase the early-termination fee for smart phone owners. This move raised some questions from consumers wanting to know the justification for the hike in the fee. Now, the Federal Communications Commission (FCC) has started asking Verizon Wireless some questions about this move.
Last month I wrote a story about Verizon Wireless’s plans of doubling the early-termination fee (ETF) for consumers who own smart phones. According to Verizon Wireless, the reason behind this fee increase was to help subsidize the cost of the smart phones.
The company also announced plans to institute a gradual pay-off policy of the ETF per month on the contract. However, even after a two-year contract consumers would still have a remaining $110 balance on the ETF.
According to PC World, the FCC has now stepped in wanting answers from Verizon Wireless behind the ETF price hike. As it is, the FCC has been eying the nature of the ETF across all of the wireless carriers. It seems like Verizon Wireless’s move raised a red flag with the FCC.
The FCC is also asking the wireless carrier about accusations that the company charges consumers a $2 fee even for those who may have inadvertently loaded up their Web browsers. A Verizon Wireless representative indicated that accidental Web usages are normally credited back to the consumer’s account. Apparently, Verizon Wireless has yet to answer any of the questions posed by the FCC around the increase in the ETF.
The fact that the company is gambling big with the new Android phone to compete with the iPhone may have something to do with the new ETF policy. I wrote a story back in October that At&T’s profit margin is taking a huge hit due to the manufacturer’s cost of the iPhone. It seems like Verizon Wireless wants to avoid a similar situation with the Android.
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December 6th, 2009
Its simple really. They need a way to make it financially unsound for all the people who are buying on their BOGO deals and then cancel the second line, pay the ETF, and flip the second phone on ebay or such.
But the $10/month reduction IS ridiculous. If they had made it $20/month most of the hubbub over this wouldn’t have materialized.
I guess the alternative is stop subsidizing phones. But unless the whole industry does so that would never fly either.
or they COULD just stop the BOGO deals. But those have been very successful in moving customers to smartphones as shown by the big BlackBerry gains since they started the BOGO’s.