Google And T-Mobile Will Charge Up To $550 To Break Your Nexus One Contract

If you’re interested in the new Google/HTC Nexus One smartphone with a T-Mobile contract and can look past the problematic 3G access and buck-passing technical support, that’s great. Just, before you go through with the purchase, make sure you really, really like the phone and the service. Because, according to the Android fan site Phandroid, T-Mobile and Google have partnered up to charge you as much as $550 in “equipment recovery” and early termination fees. Update: T-Mobile has confirmed that they will be charging their own ETF on top of Google’s fee.

Residents of California have up to thirty days to return the phone if they’re unhappy, and the rest of us have fourteen days. After that…open your wallet.

You agree to pay Google an equipment subsidy recovery fee (the “Equipment Recovery Fee”) equal to the difference between the full price of the Nexus handheld device without service plan and the price you paid for the Nexus handheld device if you cancel your wireless plan prior to 120 days of continuous wireless service. For example, if the full price of the Nexus handheld device without service plan was $529 USD and the price you paid for the Nexus handheld device was $179 USD with a service plan, the Equipment Recovery Fee you pay will be $350 USD in the event you cancel within the first 120 days of carrier service. The Equipment Recovery Fee is equal to the line item in your confirmation email setting forth the discount on the full priced Nexus handheld device related to your carrier service plan activiation. You authorize Google to charge the Equipment Recovery Fee directly to your credit card, or other payment method used to purchase the Nexus handheld device, upon cancellation of your wireless plan. You will not be charged the Equipment Recovery Fee if you return your Nexus handheld device to Google within the 14 day Return Policy period as set forth below.

You agree that the Equipment Recovery Fee is not a penalty but is for liquidated damages Google will incur as a result of such cancellation. These damages may include, but are not limited to, loss of compensation and administrative costs associated with such cancellation or changing of wireless service provider(s), market changes, and changes in ownership. Please note that the Equipment Recovery Fee is imposed by Google and not your chosen carrier and is in addition to any early termination fees that may be charged by your chosen carrier in connection with termination of your wireless plan prior to fulfillment of your chosen carrier’s service agreement term. [emphasis Google’s]

We’ve checked with T-Mobile to verify that this is true, and will share what they have to say once we hear back. Here’s the statement from T-Mobile.

“T-Mobile is committed to providing customers with choice, including a variety of wireless services, handsets, features and rate plans. With the purchase of a Nexus One phone from Google, customers receive a discounted price in exchange for a 2-year service contract with T-Mobile, which includes T-Mobile’s standard early termination fee provision. For customers who choose to purchase a subsidized handset, Google has its own Equipment Recovery Fee. Customers can also choose to pay an undiscounted price for the Nexus One without a term contract and without an early termination fee.”

Translation: “yes, it’s true.”

From a consumer perspective, this raises all sorts of interesting questions. Such as: how on earth does it make sense that both the handset manufacturer/designer and the mobile carrier get to essentially charge their own early termination fees? We’ve long been told that ETFs are how a carrier recoups the cost of subsidizing handset purchases.

So who’s subsidizing the Nexus One? Collectively, they’re doing a great job of encouraging people to buy the unlocked device. Not such a bad idea.

WTF: Google Charging Nexus One ETF In ADDITION To Carrier ETF [Phandroid] (Thanks, Steve!)
Terms of Sale for Nexus Device [Google]

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