It was the day before Xmas when we reported
to you that FCC Commissioner Mignon Clyburn, one of the 5 sitting commissioners on the FCC, said that Verizon's letter to the FCC about its ETF was"unsatisfactory and troubling." Maybe that didn't scare Big Red. but now that the FCC Chairman himself, Julius Genachowsi has weighed in, we might see the heat turned up a bit. Genachowski says that Verizon needs to explain more clearly its policies about the Early Termination fees it levies on those who walk away from a 2 year Verizon contract before the 24 months has expired. Some walk away because they want a hot new phone that is an exclusive on another carrier, or because they received a free handset from a BOGO offer and want to sell the extra phone. Either way, the carrier losses on the phone it had subsidized comes out of its own pocket unless they can recoup the money by charging the ETF.
At the CES in Las Vegas, Genachowsi said, "I thought that response raised more questions than it answered. . There's a very real level of consumer confusion around these areas." The Chairman refused to say what his next move would be, but did say that the FCC will continue to investigate. For its part, Verizon justified the increase from $175 to $350 in the ETF.by citing higher customer acquisition and marketing costs. That basically suggests that customers playing BOGO arbitrage were costing Big Red some big cash.