Verizon to raise ETF?
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This article contains unofficial information.
What BGR is hearing is that Verizon plans on raising the ETF for high priced handsets, starting November 15th, to $350. The fee would then drop $5 per month. Again, this has not been confirmed or announced by Verizon. It does make sense for the company to try to recover the subsidies they lose when terms of a signed contract are not followed. Remember, as a division of a public company, Verizon Wireless has obligations to stock and bond holders and this is not the case of a big evil empire trying to put down the man. It is a company trying to stop a flow of red ink coming from those looking to take advantage of it.
source: BGR
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36 Comments
1. steverunner posted on 20 Oct 2010, 01:44 0 0
That seems fair. I don't see a problem with this.
4. SDAlpha1510 posted on 03 Nov 2009, 12:41 0 0
I agree. People need to find other ways of making an easy buck. I dont hurt me as ill prob never leave Verizon, the coverage is just too good and now they are getting some good phones as well.
7. CODYPHOBIA posted on 03 Nov 2009, 13:39 0 0
I agree with this as well. But what happens to the indirect that matches the BOGO offers and takes the risk on the subsidy? We aren't reimbursed when a customer pays an ETF. So Verizon jsut pockets the 175/350 ETF and the Agent is the one left in the dirt. This makes it difficult for an agent to stay competitive with the pricing structures. The risk is all on agents none on Verizon.
9. vzw fanman posted on 03 Nov 2009, 13:51 0 0
i agree also. people are just too greedy in our world and take advantage of good things.
24. nalu808 posted on 03 Nov 2009, 18:39 0 0
most agents abuse the situation anyways.on any carrier
29. YouLostTheGame posted on 03 Nov 2009, 22:04 0 0
Well when I worked for an indirect agent a couple of years ago, whenever we did a new activation/upgrade, we make our customers sign a contract that said if they canceled the service within the first six mos. of service, that WE would go after them to collect some ungodly fee of about $400 or so, if my memory serves me correctly. I'm not saying it was right or anything, but that's what they did. I personally hated the idea, and it was due to that and a few other practices I didn't personally agree with that eventually led to me quitting.
33. sinfulta posted on 04 Nov 2009, 00:34 0 0
I said this a long time ago. I think cell phone carriers should prorate the ETF's evenly amongst what the total price of the handset costs. Example: Customer buys Motorola flip phone of some sort for $19.99, but Full retail is $219.99 The contract should be $199.99 ETF after the first month, prorated by how many months you complete. Customer finishes 12 months, then the term me would be what's left = $99.99, cause they are halfway through. If it's a higher prices phone like a Storm2, (Let's say) the retail is $549.99, that means if they cancelled after a year, but paid $179.99 originally for the phone. Means the term fee for this person would be $184.99 after one year. Take whatever the total cost of the retail price is , Minus what they paid, equals ETF divided by however long of contract they sign. Makes sense to me at least.
2. blackirish24 posted on 03 Nov 2009, 12:26 0 0
I know everyone going to hate me ....But this does make since. People could essentially sell a pda/smartphone for more than $175 (closer to $380 is what I got when I went back to my dare). With that in mind, I see why they would want to raise ETF because of the discounts provided on their equipment.
3. jskrenes posted on 03 Nov 2009, 12:38 0 0
Wow a phonearea article that actually defends Big Red in a controversial decision.
23. JackFace posted on 03 Nov 2009, 17:49 0 0
What the hell you talking about? Phonearena has been riding Big Red's junk for the last while! They have their days.
6. acipollo posted on 03 Nov 2009, 13:34 0 0
I agree, but the rate hike should only be on the BOGO line of the deal. That's why we were charged 200 for all this time. You are paying you're way out of a contract. Everyone knows this.. And yes, I'm sure some people do take advantage of the program, but for some reason, I can see this as a veiled attempt by VZW to raise it so people will not want to leave for a better or cheaper bill with another cell provider if they have to pay 350. Right now VZW is the HIGHEST charging cell phone provider with the LEAST amount of extra features to come with the high price tag. And the network? Where I live and most people in America use cell phones they ALL have coverage..
10. bigred0308 posted on 03 Nov 2009, 14:03 0 0
well to be honest big red and at&t are at the same level just compare the prices they are exacly the same
11. conman808 posted on 03 Nov 2009, 14:05 0 0
so what makes big red any more expensive than AT&T? have you even looked at a coverage map ever? you really cant even compare t-mobile or at&ts 3 g coverage to verizon's.
19. *HOVA* posted on 03 Nov 2009, 16:19 0 0
I don't recall him mentioning AT&T in his comment at all so I'm not sure why you both commented this way... There's a ton of other carriers out there that offer lower prices, which I'm sure is what he's referring to. Obviously they aren't getting the same services/features, but his argument is quite valid. I work in retention and there's always people calling to cancel to go to Boost for their $50 unlimited plans, US Cellulars, Metro PCS. It's a lot bigger deal then the average person realizes. Most everyone that frequents this site is going to be with one of the larger carriers in the US (VZW AT&T), but in reality, these little carriers with their low rates are attracting a lot of customers. That matter aside, I do agree with the higher ETF's for these devices in ALL cases. Most of us realize the retail price, and the high subsidising carriers do to offer them at descent prices, but not everyone does. With the iPhone specifically, TONS of people are opening up 5 line accounts only to cancel and sell them. They pay an ETF and monthly charges, but for what they are selling them for, apparently they are still coming out ahead becaues they are still doing it. Higher ETF's might put a stop to this, and make it easier for carriers to avoid these churn issues.
8. jundibasam posted on 03 Nov 2009, 13:45 0 0
It is confirmed that the ETF for PDA/Smartphones will be $350 starting 11/15/2009; however, instead of the ETF going down $5.00 a month as with the $175 ETF, its going to be $10.00 a month decrease for the $350 ETF. Essentially, everything is doubled. Smartphone purchases before 11/15/09, including Droid, Eris, and Storm 2, will still have the current ETF rate.
12. jundibasam posted on 03 Nov 2009, 14:06 0 0
The average subsidy price on a Buy One Get One Free offer is slightly less than $400 and the contribution margin is way into negative territory. Based on vzw 3rd quarter earnings report, there is $27.52 expense per line, $51.04 service revenue per line, and an EBITDA margin of 46.1%, it takes 8 months to make up the subsidy and an additional 2-3 months to begin making a profit. Thus, this makes sense from a business standpoint, but some customers may be afraid to upgrade to a smartphone on 2 year contract with the hefty ETF price, but I guess they've crunched the numbers and read the surveys and feel the pros outweigh the cons on this.
13. rwrife posted on 03 Nov 2009, 14:09 0 0
This makes sense, it always bothered me that you can get a smartphone, like the Storm 2, for $150 + $175 ETF or pay full retail price of $550....it's more work but it makes sense, and is promoted by VZW tele-sales, to add a line and break the contract vs paying retail. I'd only hope VZW would adjust the retail price of the phones as their value declines.
16. CRICKETownz posted on 03 Nov 2009, 14:59 0 0
Verizon doesn't set the retail pricing of a phone since they don't make phones. That is up to the manufacturer to set the retail price. I don't see this new ETF affecting those who are satisfied with VZW's service but for those contract-phobia individuals I see this being one more thing to keep them from wanting to renew their agreement for another 2-yr term even though they wind up keeping the service for 2 years anyway.
