Phoenix Unlimited

Friday, May 28, 2010

Early Termination Fees (ETF) a case against the Big 4

In January the FCC launched an investigation into the Early Termination Fees being charged by AT&T, Sprint, T-Mobile and Verizon. "The inquiry comes only a few weeks after the FCC questioned Verizon about its high $350 ETF for 'advanced devices' and deemed Verizon’s response to be 'unsatisfying, and, in some cases, troubling'." Last week, AT&T followed Verizon's lead and increased their ETF for "advanced devices" to $325. ETFs for AT&T are pro-rated, and drop $10 per month.

If you haven't begun asking yourself why they are charging you an ETF, let me tell you their explanation. According the the Wall Street Journal Verizon said a new $350 fee is necessary to cover its higher costs and the "RISKS" of offering high-speed wireless Internet service. "The higher (early termination fee) associated with Advanced Devices reflects the higher costs associated with offering those devices to consumers at attractive prices, the costs and risks of investing in the broadband network to support these devices, and other costs and risks," Verizon wrote in a letter to the FCC.

In an earlier post, I compared what Verizon is charging for their "Droid" service with that which Virgin Mobile will be charging for their Android phone. So today I will just say... Boost Mobile is launching the Opus1 Motorola IDEN phone under the model number i1. Out the door cost will be $400 for the phone and $50 for the first month of service. Over a two year span, you will pay a total of $1,600.00 for the phone, monthly service and taxes. Verizon service for their "Droid" will cost at the minimum over 2 years $2,274.00. That is for just the phone and the service of 450 minutes of talk time. You will have to pay an additional 13% in taxes plus any additional overage and late fees.

If Boost Mobile can give you "UNLIMITED" voice, text, data, email, IM's for $50 a month with no ETFs then why does Verizon and AT&T think they take more risk? The big carriers have continually robbed consumers of their money using their monthly service charges and ETFs for ages under the guise that they are discounting the handsets to the consumers. Virgin will give service for as little as $25/month for an "advanced device" without charging a fee for any "risk" for use of the broadband network.

Let's call it what it is. This is the Big 4s way to keep you with them forever. AT&T raised their fee in May because, in this authors view, Verizon will be getting an iPhone on the CDMA/LTE network within the year. Several years ago they increased their contracts from 1 year to 2 years for the same reasons. What are we going to have next? A 3 year contract?

It's time to say goodbye to the Postpaid world and realize that Prepaid is the only business model that should exist. If Boost Mobile or Virgin Mobile can't make you happy they don't deserve your business. You should be able to change to another network if you are treated poorly. Getting service with any of the Big 4 companies, with their outrageous service charges and ETFs, is tantamount to indentured servitude.

1 comment:

  1. AnonymousMay 28, 2010

    I agree with that fact, I think it is ridiculous how much they make you pay if you want to cancel, if your overpriced in service and don't get the help you need while holding on to the same phone for 2 years, (it is hard to keep one phone for that long) I love that they charge that much though, cause now people will realize they can go somewhere where they don't have to be ripped off, where they can get straight fees and are still free to leave if they disagree with the service. It doesn't get much better than that.