FCC Questions Verizon $350 ETFs For Smartphones

The Federal Communications Commission has a few questions for Verizon Wireless about their decision to double the early termination fees for contracts that include smartphones and other “advanced devices.”

The questions came in the form of a letter to Verizon’s vice president for legal affairs. The company has two weeks to respond to the questions, and we eagerly await their reply.

Here are selections from a few of the FCC’s questions about the sudden ETF doubling:

What information about the higher ETF does Verizon Wireless provide to
prospective customers, and when? How do consumers know whether the
increased ETF applies to the device and service plan they would like to purchase?
Please provide a description of whether or how a customer seeking to sign up for
Verizon Wireless service by first selecting a device or service plan on the Verizon
Wireless website would be able to find out about the levels and terms and
conditions of the ETF, other than by calling up the formal Customer Agreement
accessible in small type at the bottom of the web page.

Please provide the details of any trial period in which customers may discontinservice without being subject to the increased ETF. Do customers have an
opportunity to review their first bill before the trial period expires? How is this
information communicated to prospective and current customers?

We are interested in learning whether, and to what extent, the increase in the ETF
is the result of increases in the wholesale price of “advanced devices” charged by
equipment manufacturers, and whether any such cost increases are uniform across
all “advanced devices.” Does Verizon Wireless contemplate a similar increase in
ETFs in the near future for any other services and devices?

It appears that if a customer cancels a two-year contract after 23 months, the
customer would still owe an ETF of $120. Is this correct? If the ETF is meant to
recoup the wholesale cost of the phone over the life of the contract, why does a
$120 ETF apply?

We’re particularly interested in the answer to that last question. Verizon previously announced that ETFs would decrease by $10 each month that a smartphone is activated, leaving, as the FCC says, a $120 ETF at the end of a two-year contract.

Washington to Verizon Wireless: Can you hear us now? [Washington Post] (Thanks, Anthony!)

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