FCC Probes Verizon Early Termination Fees - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Mobile
News
12/7/2009
01:20 PM
50%
50%

FCC Probes Verizon Early Termination Fees

The government agency wants to know why Verizon Wireless doubled its cell phone cancellation fees.

The Federal Communications Commission is questioning why Verizon Wireless doubled its early termination fees from $175 to $350.

In a formal letter sent Friday, the government agency asked the nation's largest cellular operator several questions regarding the rationale for the new cancellation policy. The FCC is also seeking answers about how clearly labeled the ETFs are on customers' monthly bills.

Verizon did not respond specifically to the FCC's inquiry, but the mobile operator has said it needed to raise ETFs in order to defray the costs of advanced devices it sells to customers at a subsidized price. For example, the BlackBerry Storm 2 costs about $179 with a new two-year contract, but it costs $539 without a contract or ETF. The unsubsidized price is relatively close to what Verizon has to pay for each device, although it likely gets a bulk discount.

The FCC does not seem to be accepting that rationale though, and it is expecting formal responses by Dec. 17.

"It appears that if a customer cancels a two-year contract after 23 months, the customer would still owe an ETF of $120," the FCC said in the letter. "Is this correct? If the ETF is meant to recoup the wholesale cost of the phone over the life of the contract, why does a $120 ETF apply?"

The move comes as ETFs are becoming a contentious issue in the mobile space, and four U.S. senators recently introduced legislation to limit these cancellation fees. The legislation would limit the amount carriers can charge for an ETF, as well as make these fees more transparent to end users.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Slideshows
IT Careers: Top 10 US Cities for Tech Jobs
Cynthia Harvey, Freelance Journalist, InformationWeek,  1/14/2020
Commentary
Predictions for Cloud Computing in 2020
James Kobielus, Research Director, Futurum,  1/9/2020
News
What's Next: AI and Data Trends for 2020 and Beyond
Jessica Davis, Senior Editor, Enterprise Apps,  12/30/2019
White Papers
Register for InformationWeek Newsletters
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
Video
Current Issue
The Cloud Gets Ready for the 20's
This IT Trend Report explores how cloud computing is being shaped for the next phase in its maturation. It will help enterprise IT decision makers and business leaders understand some of the key trends reflected emerging cloud concepts and technologies, and in enterprise cloud usage patterns. Get it today!
Slideshows
Flash Poll