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Verizon on FCC hot seat about raising ETF?

Posted: , by Alan F.

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Verizon on FCC hot seat about raising ETF?
The FCC is considering sending Verizon to bed without dessert. The governmental agency, in a letter to Big Red, wants to know why Verizon had raised the Early Termination Fee on advanced devices to $350 starting November 15th. The letter includes a questionnaire to fill out (Verizon has to use a number 2 pencil, we assume) about the thinking and logic that went into the decision. Now, the FCC pencil pushers aren't totally without reason. Certainly they can figure out that the reason behind Verizon's decision was to prevent Mr. John Doe from taking advantage of, say, a BlackBerry Storm BOGO. Mr. Doe signs the papers, lays out cash for one Storm and gets two phones. The second Storm is sold on eBay and the extra line is canceled. Under the old ETF fee, this scenario was making money in the wonderful game of cellphone arbitrage. The problem is that cellphone arbitrage is a zero sum game meaning that the profits going to Mr. Doe were coming out of Verizon's hide.

Instead of looking at this logically, the Feds are taking a purely mathematical approach and want to know why, with Verizon's sliding scale, a customer who has stayed on for 23 months out of a 24 month contract will still owe $120 if he calls it quits before the 24th month ends. The Feds say that the ETF is designed purely to get back the wholesale cost of the phone over the life of the contract, so why charge $120 for quitting 1 month short of the expiration of the contract? That's a good question that the nation's largest carrier will need to answer at some point. But certainly the FCC should understand that Big Red wants to stop getting scammed by those BOGO bandits. Want to read the entire original letter from the FCC to Verizon? Click on the sourcelink. Oh yes. The FCC also wants to know about the $1.99 charge some Verizon customers were billed for accidentally accessing the mobile web. Unless there is a Tiger Woods sized skeleton in Verizon's closet, this should all blow over like a summer storm in South Florida.

source: FCC via WSJ, BGR

Verizon on FCC hot seat about raising ETF?

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posted on 20 Oct 2010, 01:44

1. vzwtech86 (Posts: 20; Member since: 31 Oct 2009)


verizon is such a dirty company... if they dont wanna get ripped off anymore then stop doing so many damn bogo offers!! the blackberry one lasted almost a year on and off and now with this droid one theyre asking for it. 350 for an etf is ridiculous, and to verizon an "advanced device" is pretty much anything with either a touchscreen, full web browser, pda. so really any good phones you get are gonna have 350 etf's attached. verizon was doing so well as far as embracing android and being more open as a company. two steps forward and then they throw it in reverse and take a few miles back. theyre also the only carrier to implement it (so far, hopefully no other carrieris stupid enough) and i see it as a middle finger to the customer

posted on 05 Dec 2009, 15:37

14. Kiltlifter (Posts: 742; Member since: 11 Dec 2008)


Personally I think it is rediculous to have a contract... PERIOD! how about we stop subsidizing phones at all and make everyone purchase them retail? Sounds likea plan to me, becuase they vzw wouldn't make people have data plans to make up for the subsidization, Little whiners like you could stop complaining about gettinga 599.99+ device for $200.00 then complain about having to pay a ETF. Sounds good to me... So unless you are willing to pay full retail for your device, quit whining or complaining about the ETF policies by any mobile carrier. if you aren't willing to pay full retail for the device then it isn't for you.

posted on 06 Dec 2009, 10:38

28. Homotechual (Posts: 65; Member since: 27 Oct 2009)


Oh please, get over yourself. The point is that no other carrier is charging $350 for a early termination fee except Verizon on advanced devices. If they really wanted to save themselves from BOGO offers they would have put a rule on there like you can't return the free one..ect or stop the BOGO's if really THAT many people are doing it. (Which is funny because I'm one of them haha) POINT being, their just proving that the only thing keeping them on top is their marketing team and the "brand" oh and my favorite "Verizon has more coverage" yes because I visit the Salt Flats of Utah all the time and my current carrier doesn't have coverage there.

posted on 06 Dec 2009, 14:34

31. endokun83 (Posts: 13; Member since: 09 Aug 2009)


I don't think the problem is with the free device being returned. It's customers getting the free phone and cancelling the line then selling the phone on Ebay or craigslist. Let me make it clear that I don't agree with the termination fee hike and I think $350 is a little ridiculous. Verizon needs to find a better strategy then bleeding customers dry on termination fee's.

posted on 05 Dec 2009, 07:00

2. som (Posts: 768; Member since: 10 Nov 2009)


Verizon think they are best carrier this is why they rip off every customers on the hidden fees and highest EFT $350. Because those customer has no choice to quit or switching carrier more like a communist with very tough rules and regulations. Just a few customers take advantage on the smartphones now Verizon punish all customers.

posted on 05 Dec 2009, 15:38

15. Kiltlifter (Posts: 742; Member since: 11 Dec 2008)


Personally I think it is rediculous to have a contract... PERIOD! how about we stop subsidizing phones at all and make everyone purchase them retail? Sounds likea plan to me, becuase they vzw wouldn't make people have data plans to make up for the subsidization, Little whiners like you could stop complaining about gettinga 599.99+ device for $200.00 then complain about having to pay a ETF. Sounds good to me... So unless you are willing to pay full retail for your device, quit whining or complaining about the ETF policies by any mobile carrier. if you aren't willing to pay full retail for the device then it isn't for you.

posted on 06 Dec 2009, 10:38

27. Homotechual (Posts: 65; Member since: 27 Oct 2009)


Oh please, get over yourself. The point is that no other carrier is charging $350 for a early termination fee except Verizon on advanced devices. If they really wanted to save themselves from BOGO offers they would have put a rule on there like you can't return the free one..ect or stop the BOGO's if really THAT many people are doing it. (Which is funny because I'm one of them haha) POINT being, their just proving that the only thing keeping them on top is their marketing team and the "brand" oh and my favorite "Verizon has more coverage" yes because I visit the Salt Flats of Utah all the time and my current carrier doesn't have coverage there.

posted on 05 Dec 2009, 07:40

3. Mateo8326 (Posts: 472; Member since: 15 Jul 2009)


yeah there excuses is bogus! so what about the bogo offer they have to use your service anyways. yeah you lose profit on the phones but the have to get a 2yr contract and for what your charging them monthly rather they know about it or not makes up for the those bogo offer you guys are stating is why

posted on 05 Dec 2009, 15:38

16. Kiltlifter (Posts: 742; Member since: 11 Dec 2008)


Personally I think it is rediculous to have a contract... PERIOD! how about we stop subsidizing phones at all and make everyone purchase them retail? Sounds likea plan to me, becuase they vzw wouldn't make people have data plans to make up for the subsidization, Little whiners like you could stop complaining about gettinga 599.99+ device for $200.00 then complain about having to pay a ETF. Sounds good to me... So unless you are willing to pay full retail for your device, quit whining or complaining about the ETF policies by any mobile carrier. if you aren't willing to pay full retail for the device then it isn't for you.

posted on 05 Dec 2009, 15:49

19. E.N. (Posts: 2610; Member since: 25 Jan 2009)


Okay kiltlifter, we understand your opinion. Don't be offended with the fact that not everyone has to agree.

posted on 07 Dec 2009, 10:06

39. jskrenes (Posts: 209; Member since: 11 Dec 2008)


The thing is, you ALREADY can do that, pay full retail and not sign the contract. Still have to do the data thing, but if you want a no-contract/EFT phone, you can do that. I highly doubt we'll get rid of contracts altogether. We have an entire industry based on it: phones are discounted with a contract. Salespeople's commissions are directly tied to contracts. Some sort of hybrid system would be ideal: let customers who don't want or can't afford a full retail device get a subsidized phone, let customers who pay full retail for a device have more control of their service.

posted on 05 Dec 2009, 07:41

4. lolipopjones (Posts: 51; Member since: 21 Jun 2009)


This is not about being ripped off on Bogos. Verizon even had a little email sent to their employees stating that they were not to talk about the ETF with customers unless brought up. Not only that but in the last Vid they had from the Arkansas meeting at the Verizon Center the execs admitted the ETF was designed to keep people from jumping ship....

posted on 05 Dec 2009, 12:19

8. VZWEMP (Posts: 158; Member since: 11 Dec 2008)


thats funny because i received no email instructing us not to discuss the raised ETF. and if the etf were to prevent people from jumping shit then why wouldnt we raised the etf on ALL handsets? think things through before you post. WE were the first carrier to implement prorated ETFs and all other carriers followed suit. so shut your mouth because you just another consumer you thinks that you should be able to do whatever youd like at any company's expense.

posted on 05 Dec 2009, 12:45

9. htc-guru (Posts: 3; Member since: 29 Oct 2009)


dude really you are telling others to think things through before you post. why dont you go back and read what you wrote. really jumping shit. thats what verizon is SHIT and you are a SHIT_HEAD.

posted on 05 Dec 2009, 13:53

10. vzw fanman (Posts: 1976; Member since: 11 Dec 2008)


Verizon isn't shit.

posted on 05 Dec 2009, 13:54

11. BrokenImaege (Posts: 173; Member since: 27 Jul 2009)


You are an idiot!!!!! I work for Verizon and I can tell you that when we raised the ETF's, we were told that we needed to inform the customer clearly about the increased ETF on those devices. I remember the store meeting we had concerning it. We don't hide anything from anyone. It is clearly in writting and is available on websites and booklets. I don't know what call center you are in, but please let me know so I can send an email over that way for you. Also, the ETF fees are there to prevent people from buying bogo and disconnecting immeditely to make profit off of phone. The ETF is still decelerated as it was before. Nothing has changed in that matter. Clearly you are an idiot!!!

posted on 05 Dec 2009, 15:59

20. E.N. (Posts: 2610; Member since: 25 Jan 2009)


How about getting rid of the BOGO deals in smartphones all together. It will solve all problems all together. I think that's an unfair advantage to boost phone sales and get more customers. A few months ago the Storm was one of the top selling devices despite all the returns and that is because of the BOGO deals. And now Verizon has the BOGO deals and the high ETF rates. That will greatly increase their profit and increase the number of customers that hate their carrier/phone and want to leave/change phones but can't afford to. It's still about $250 dollars to cancel after the 1st year. That's ridiculous.

posted on 05 Dec 2009, 17:16

23. vzw fanman (Posts: 1976; Member since: 11 Dec 2008)


so don't leave, it's the simple.

posted on 06 Dec 2009, 18:54

37. Illyich (Posts: 167; Member since: 13 Oct 2009)


Well, I've never been with Verizon, but I know that they have very high customer satisfaction from what I hear, so they certainly don't sound like poo. At the same time, Fanman, don't assume that everyone has the same evangelical approach to wireless carriers that you do.

posted on 07 Dec 2009, 10:31

40. vzw fanman (Posts: 1976; Member since: 11 Dec 2008)


What do you mean?

posted on 05 Dec 2009, 08:09

5. JeffdaBeat (unregistered)


Make the ETF equal to the amount of the total discount of the phone(s). Prorate the ETF accordingly. It's that simple. I think the stance T-Mobile is taking where there is no contract and pay the price of the phone monthly is also a good solution. An even better one would be to give the customer the ability to set the time frame in which they want to pay off their phone as well. I just don't see how the government can really stop this. People effectively sign up for this knowing that this will be their ETF. The customers who signed up before this was instituted were not effected what so ever. Thing is, what if Verizon just shot back at the government and said, "If you don't like our ETF's then we will do away with discounting phones all together." Then the government can start getting complaints that phones are too expensive. Either way, people won't be happy unless the regular price of a phone is $29.99. I honestly wish this was something all the carriers would adapt. Stop putting phone problems in the hands of the service providers. Have LG, Samsung, and RIM have their own stores just like Apple and let them discount the phones in the way that they want to. The carriers can have retail stores, but unless they are willing to take the hit for the price, the phones should be sold under the regular price with no contract. People would complain, but they would also hold on to their phones longer. If people didn't like the prices, let the manufacturers handle those complaints. If this were the way, I'd have my phone until it fell apart and most people would. But then the carriers wouldn't be about offering the best phones, but rather the best service and prices.

posted on 05 Dec 2009, 15:39

18. Kiltlifter (Posts: 742; Member since: 11 Dec 2008)


I agree with you

posted on 05 Dec 2009, 16:02

21. dandirk (unregistered)


MN senator is working on a national bill that would do just that. Require carriers to charge ETF based on discount. I assume verizon just wants one easy number to use... Not that it matters cause in the states such a large portion of phone are subsidized and carriers could litterlly ask for ANY msrp they want... that droid costs 1 million dollars but we will give it to you for $200 + 2 year contract... at 23 mo you can pay the prorated ETF based on discount/cost which will be $75000 (no I didn't do any math # just to make a point). hmmm verizon will tell you that the droid costs $500, yet there are reports that verizon pays $450. I am not saying they shouldn't make a profit but most people assume these subsidies are purely to make money on the service...

posted on 06 Dec 2009, 11:53

30. gba2000 (Posts: 49; Member since: 28 Dec 2008)


On AT&T the ETF is $175(and prorated), the discount off phone is normally $150(iPhones are $400 discount). About the same.

posted on 05 Dec 2009, 10:11

6. vzwman (Posts: 385; Member since: 26 Oct 2009)


mmmm i did the droid bogo deal yesterday should i bale? hehehehe

posted on 05 Dec 2009, 15:39

17. Kiltlifter (Posts: 742; Member since: 11 Dec 2008)


Personally I think it is rediculous to have a contract... PERIOD! how about we stop subsidizing phones at all and make everyone purchase them retail? Sounds likea plan to me, becuase they vzw wouldn't make people have data plans to make up for the subsidization, Little whiners like you could stop complaining about gettinga 599.99+ device for $200.00 then complain about having to pay a ETF. Sounds good to me... So unless you are willing to pay full retail for your device, quit whining or complaining about the ETF policies by any mobile carrier. if you aren't willing to pay full retail for the device then it isn't for you.

posted on 05 Dec 2009, 16:22

22. zr1vette (Posts: 26; Member since: 22 Aug 2009)


STFU. you dont have you repeat yourself every other post.

posted on 07 Dec 2009, 00:35

38. E.N. (Posts: 2610; Member since: 25 Jan 2009)


Henprobably thinks he's being persuasive

posted on 05 Dec 2009, 10:31

7. tuminatr (Posts: 774; Member since: 23 Feb 2009)


jeff you need to think it through if you made the etf equal to cost/ retail price that would be more than the $350 in most cases for example the droid eris retails for $489. $489- $99 (the price after rebate ) = $390 now if you did a bogo $489 etf for the second one. I think verizon is loosing money on smart phones and they have two choices 1 make it up in etf fees 2 charge more for the smart phones to give you a example I dropped my storm and broke it. I don't care what my number is, I have had the phone for six months and did not buy the insurance. I decide to cancel my service pay the $145 disconnect fee and get a new storm for $50 after rebate with a new number. rather than pay $489 for the storm outright do you see the difference I am $294 ahead of the game

posted on 05 Dec 2009, 14:08

12. BrokenImaege (Posts: 173; Member since: 27 Jul 2009)


Thank you!!!! This is the reason we did it. We aren't trying to steal from customers. We are just making sure we get back what we paid and what we pay out to companies like Blackberry and Google. Here is the funny part to all this. All other companies have ETF's of $250 plus and never decelerates. I don't see people complaining about that but when the upfront is higher but is lower at the end, people complain now? If that is the case, why don't we just make our ETF like our competitors and everyone be happy???? I would like to see this happen to just shut everything up.... Y don't we just do no contracts and full priced phones from now on line 80% of the world??? This would stop it all and no more issues with contract breaking or ETF's..... How does that sound everyone? $300 to $800 a phone..... :-)

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