Verizon Defends Cancellation 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
12/21/2009
01:20 PM
50%
50%

Verizon Defends Cancellation Fees

The largest U.S. carrier said doubling its early termination fee was necessary to reduce consumers' costs for sophisticated devices like the Storm 2 or Motorola Droid.

In a response to a probe by the Federal Communications Commission, Verizon Wireless said its raised early termination fees are necessary to get advanced devices like smartphones to consumers at reasonable prices.

The nation's largest mobile operator recently doubled its ETFs to $350 for devices like smartphones and 3G netbooks to help defray the costs of subsidies. For example, Verizon offers Research In Motion's BlackBerry Storm 2 for less than $200 with a new two-year contract, but that same device costs about $539 without a contract or ETF. The higher price is close to what each device costs Verizon, although it likely gets a volume discount.

"This pricing structure enables Verizon Wireless to offer wireless devices at a substantial discount from their full retail price," the carrier said in a written response to the FCC. "By reducing up-front costs to consumers, this pricing lowers the barriers to consumers to obtaining mobile broadband devices. It thus enables many more consumers, including those of more limited means, access to a range of exciting, state-of-the-art broadband services and capabilities."

Verizon also said the advanced devices require additional marketing and support costs, and the raised ETFs help cover these costs as well.

The raised fees drew the attention of four U.S. senators, who introduced legislation to curb cancellation fees. The senators asked the FCC to inquire about Verizon's fees because even with the prorated system that declines $10 per month, a user could potentially still owe up to $100 if they cancel near the end of their two-year deal.

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
10 Trends Accelerating Edge Computing
Cynthia Harvey, Freelance Journalist, InformationWeek,  10/8/2020
Commentary
Is Cloud Migration a Path to Carbon Footprint Reduction?
Joao-Pierre S. Ruth, Senior Writer,  10/5/2020
News
IT Spending, Priorities, Projects: What's Ahead in 2021
Jessica Davis, Senior Editor, Enterprise Apps,  10/2/2020
White Papers
Register for InformationWeek Newsletters
2020 State of DevOps Report
2020 State of DevOps Report
Download this report today to learn more about the key tools and technologies being utilized, and how organizations deal with the cultural and process changes that DevOps brings. The report also examines the barriers organizations face, as well as the rewards from DevOps including faster application delivery, higher quality products, and quicker recovery from errors in production.
Video
Current Issue
[Special Report] Edge Computing: An IT Platform for the New Enterprise
Edge computing is poised to make a major splash within the next generation of corporate IT architectures. Here's what you need to know!
Slideshows
Flash Poll