Monday, December 21, 2009

Verizon Wireless Defends Increased ETF for Advanced Devices

Verizon's decision to increase the ETF for it's advanced devices have attracted a lot of attention including US senators like Amy Klobuchar. Recently, the FCC has requested the carrier to explain the reasoning behind the increase in early termination fees from $175 to $350 for "advanced devices" (Click here to see the list of Verizon's Advanced Devices).

Well, Verizon Wireless has released a statement in defense of its decision to increase the controversial fees for some of its products. Unfortunately, the carrier released a 77 page response which would be impossible to post here in its entirety.

So let me just give a brief summary of the highlight points of Verizon's defense of the $350 early termination fee for advanced devices.
  • the increased ETF allows the carrier to provide more capable handsets at lower upfront costs, and to reduce its losses if/when a customer chooses to leave their contract early.
  • Verizon claims that the new rules causes the company to lose money when customers who choose to cancel their contracts during the 23rd month, during which time they would still owe $120 ETF.
  • Advertising and marketing collateral are sufficient to make sure customers are informed of these new wireless contract policies.
  • In 2003, the FCC stated that it doesn't support the concept of customers breaking contracts and that carriers have a right to recoup those fees.
  • the additional cost it incurs to procure the devices on its advanced list is greater than the difference between the two ETFs ($175) on average.
  • Advanced devices strains the broadband network up and extra guaranteed revenue is needed to keep the network at optimum performance.
Well, this has certainly turned interesting. I didn't expect the change in wireless contract policy would trigger such reaction from the government. Perhaps the tough economic atmosphere is making the government more aware of possible consumer abuse.

That's it for this wireless contract update. Tune in to this blog for more developments on this important mobile phone contract issue.

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