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Verizon explains ETF and Mobile Web charges to FCC

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Verizon explains ETF and Mobile Web charges to FCC
The FCC had some questions regarding a couple of Verizon's activities. First, the Feds were wondering about the $350 ETF Verizon was charging those walking away early from 24 month contracts with advanced devices. Under the terms of the ETF, those canceling a 2 year pact in month 23 would still have to pay Verizon $120. The cellular operator told the FCC that the costs of advanced devices is rising and the cost of providing a low up-front price of a cellphone to a customer is rising substantially. and even with the $350 ETF, the company loses money from early terminations. If the ETF were to be prorated down to $0 by the end of the contract, the fee would be higher in the beginning than it is now. Also, you might recall that part of the increase in the ETF was to stop the BOGO Bandits from practicing their game of cellphone arbitrage. In this zero-sum game, a person takes advantage of a BOGO promotion by buying, say, the DROID ERIS for $100 and a second unit is free after a mail-in rebate. A 2 year contract needs to be signed for both lines. When the buyer gets home, he places the second unit for sale on eBay and cancels the second line. The profit made by the BOGO Bandit is the money lost by Verizon that comes out of the carrier's pocket. Verizon does say that the ETF is not limited to recovering its investment in the wholesale cost of the device. The fee is also used to offset the cost of running a smartphone network, paying for advertising the devices, technically supportong the phones and running a broadband network.

As for the $1.99 fee charged to those who claim to have accidentally accessed the mobile web, Verizon denies that it charges those who simply land on the mobile web space by mistake. According to the wireless operator, the $1.99 is charged only when a customer navigates away from the launch page. Big Red also notes that its phones can be programmed not to accidentally launch the mobile web and a data block can be put on a handset. Despite this explanation, Verizon customers and employees still say that there are accounts getting hit with the $1.99 charge for a mistaken trip to the mobile web. According to DSL Reports, a Verizon employee has said that the $1.99 charge has been used to generate millions of dollars in extra revenue each month. The FCC will be reviewing Verizon's response and we shall see what comes from their long hard look at the answers.

source: DSL Reports via BGR

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32 Comments

1. tuminatr posted on 20 Oct 2010, 01:44

must be a slow news day I don't know why this has gotten so much press

2. Kappy posted on 20 Dec 2009, 06:12

agreed

3. DonLouie posted on 20 Dec 2009, 08:38

An arbitrary ETF increase with weak reasoning and saying that anybody who is saying they are lying is news to me

6. E.N. posted on 20 Dec 2009, 14:01

agreed. If this was AT&T, this article would be filled with comments. But since it's Verizon, I guess it's nothing.

8. deschats posted on 20 Dec 2009, 21:59

atleast we get what we pay for, i feel horrible for at&t customers. my condolences to those who are pained by this horrible company.

10. E.N. posted on 21 Dec 2009, 01:02

Why do you fell bad for them? If they wanted to leave they can just pay $175. but if someone wanted to leave Verizon or get a new phone, they could pay.....hm? I'm not sure. Depends. Is that what you mean by you get what you pay for? Or do you pay what you do so Verizon gets what THEY want?

12. PapaJay224 posted on 21 Dec 2009, 01:24

Suppose you should pick the right service the first time and not just a Crappy iPhone....-1 and no sympathy for your crappy comment.

14. gba2000 posted on 21 Dec 2009, 07:15

What if they have no problem with network or iPhone?

17. E.N. posted on 21 Dec 2009, 12:09

Well when I was on Verizon, I never had the right phone. I'd love it for 6 months and then hate it afterwards. Luckily, They still had the $175 cancelation fee. And the iPhone might be crappy, but Most touch screen phones are trying to out beat it in its crappiness, because I guess crap is what people want.

31. whocares posted on 23 Dec 2009, 15:27

I guess verizon is having problems with people cancelling as well or else they would be worrying about ETFs :D

32. Russki posted on 26 Dec 2009, 23:24

You have to consider this; Verizon remain the best cellphone carrier for 9 years in a row, (Go check out consumer reports). Verizon has the Best voice coverage and data coverage hands down (We're not talking about speed here, just reliability). If you look at At&t's yearly expenditures, you'll see that they spend less and less each year to expand infrastructure, and grow their customer service workforce. Instead, At&t is struggling to compete in their TV and DSL service. Verizon on the other hand has been keeping the tab the same, if not increasing their infrastructure expanding allocation of funds. Where do you think that money comes from? Yes, the 80+ million Verizon subscribers, and cohorts. You get wht you pay for: the best cellular service in the continental US. So why are people getting upset about big red trying tie a turnicate to stop frauders from hemmoraging the profit flow? Think about the retail employees... if a customer cancels within the first 6 months, the sales rep gets hit with a chargeback. The ETF helps make that hit as minimal as possible - keeping their employees in mind. *End Rant*

4. AT&T posted on 20 Dec 2009, 12:00

looks like verizon is having some flaws, you don't see AT&T having issues with service charges

5. dave412_4 posted on 20 Dec 2009, 13:45

What about the incentives att is trying to give to huge data users. I think they might try to raise the price again for data especially for iphone users. Maybe its all that talking and surfing at the same time that's hurting them.lol

9. deschats posted on 20 Dec 2009, 22:00

*laughs* please see comment #8 listed under DonLouie

16. Jake15 posted on 21 Dec 2009, 11:42

haha too bad you dont have 3g to back any of that up

7. redstu36 posted on 20 Dec 2009, 15:56

Trying to keep the resell market in check for Blackberrys.

11. PapaJay224 posted on 21 Dec 2009, 01:21

Heres the Flipping Point, YOU KNOW WHEN YOU SIGN, ITS NOT A MYSTERY! You buy a phone YOU GET A CONTRACT, Who the hell cares about how much it is, go ask your landlords how much it is to break lease....exactly like 1500$ or more...You want Cheap up front, keep your services don't cancel - your not out any money (wheres the problem). If you don't want an ETF because your a Bi Polar person who JUST LOVES TO BITCH, Than buy it out right and shut up No contract, no fuss. People act like this is new stuff, Verizon service is what you pay for, it WORKS, I would upgrade and sign if my ETF was 10,000. I dont want to hear anyone whining about "oh what if they don't have a phone I like or what if this and what if that"...READ BEFORE YOU SIGN, AFTER YOU SIGN: SHUT UP!

18. E.N. posted on 21 Dec 2009, 12:24

Why are you so defensive man? If you open your eyes, you will see that a lot of people care. Just because you don't, that doesn't mean someone else doesn't. Even the FCC disagrees. So stop screaming, your opinions really mean nothing. Maybe they should not make their phones so cheap in the first place. Smartphones on Verizon use to be so expensive. But they lowered the prices dramatically to the $199 zone to (I think) compete with the iphone's pricing. I mean if they say they loose to much money, why not just raise then price of the phone? That's because they don't want to because everyone would choose a $199 iPhone over a $299 Droid. So it's not like they are doing Verizon customers a favor by lowering the prices and jacking up the early termination fee. And hey, if you don't want to hear any more complaining (like you're doing) stop coming back you retard. No one is making you read these comments.

29. Sniggly posted on 21 Dec 2009, 22:35

News flash for you, buddy: the government isn't always right, and in fact is often wrong. And the early termination fee is something you only have to worry about if you cancel. Which, as I recall, doesn't happen as often with Verizon as it does with ATT, relatively speaking.

13. david_the_gom posted on 21 Dec 2009, 01:56

i totally agree with $350 ETF for advanced devices... the big red gotta find some way to stop those BOGO gameplaying bandits so vzw would actually sell those phones to ppl who really needs'em... (ef you those who play BOGO cheat games...) but i totally disagree with $1.99 charge.. i use vzw tp2 so i don't have to worry about internet, but my mom and my dad never uses internet and still they accidently hit the up button and, boom, there's $1.99 charge for BOTH of them... that's a true bull shit...

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