• E-mail this page
• |  Print this page
• | 
• | 
• | 

Verizon Wireless To Double ETFs To $350?

If you thought $175 was a steep early termination fee to pay, get ready for some unwelcome news. In order to ward off scammers, Verizon Wireless is giving serious consideration to doubling its ETF to $350 for "advanced" -- read: expensive -- devices. Whoa.

Early Termination Fees are an insurance policy that wireless network operators have installed to make sure they don't lose their shirts on handset subsidies. Customers can buy a new phone on the cheap because the carriers subsidize some of the cost. If a customer breaks their contract, the carrier collects the ETF to help repay the cost of the handset, which the customer didn't pay full price for.

All four major U.S. carriers charge an ETF of $175 with two-year contracts. Most also pro-rate the ETF and drop it by $5 for every month that a customer sticks to their contract. So, if you remain a customer for six months, your ETF drops by $30 and you'll only pay $145 if you break the contract with said carrier.

Verizon apparently believes $175 isn't enough to recoup expenses on advanced devices such as smartphones, which have a much higher retail cost. According to internal documents spied by The Boy Genius, Verizon Wireless is prepared to double ETFs to $350 starting November 15 -- just in time to cover all those holiday-driven smartphone sales. The documents note that the ETF will drop by $10 per month rather than $5. The same customer who sticks with Verizon for six months will have a $290 ETF to pay, rather than $145. Ouch, that's gonna hurt.

Some suspect that the policy change is in the works to prevent scammers who take advantage of buy-one-get-one-free offers, cancel the contracts, and make a profit selling the devices that they got for free (even after paying the ETF).

I reached out to Verizon Wireless to confirm this policy change, but spokesperson Brenda Raney only said, "No comment."

If you're in the market for a new smartphone on Verizon Wireless' network, I'd make sure to buy before November 15.

« Cisco: It's All About Bandwidth, Stupid! | Main | More Reasons Why Linux Misses The Desktop »