Verizon explains ETF and Mobile Web charges to FCC

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

28. piratejb

Posts: 22; Member since: Jan 08, 2009

what all you vzw fans are saying that anything big red does and charges is justified? wow what a bunch sheeps

25. sleepyjohnny

Posts: 151; Member since: Dec 16, 2009

i have a very simple solution to those who have commitment issues (you know who you are), theres a service called pre paid and pay as you go... the phones are crappy, but theres no termination fee. As for the whole mb thing, back when i had that problem, i'd just call verizon and tell them to take it off. they'd always understand. even when my phone somehow subscribed to that verizon tv, they took off and credited me my money back. this article is wack and i just had to post a comment before i died of shock of how dumb it was. if i were the one to make the choices for verizon, i would also raise the ETF. reasoning: dude i lowered all my phone prices for you, and you always have service, and you wanna now rip me off? you still got idk how many months and so even at 350, you still save than if you were to keep paying. buh bye

26. dongdou

Posts: 49; Member since: Jan 18, 2009

RIGHT ON. plus it goes down ten bucks a month so it is still variable and fair.

30. E.N.

Posts: 2610; Member since: Jan 25, 2009

What a great solution. I'm going to buy a prepaid razr right now

23. DonLouie

Posts: 594; Member since: Dec 22, 2008

All the other carriers have BOGO and cheap smartphones, they aren't raising ETF's and justifying with cost of service and ad cost

21. Fanboys Suck

Posts: 609; Member since: Dec 12, 2008

I don't really see what there is to explain to the FCC.

24. dongdou

Posts: 49; Member since: Jan 18, 2009

Well the 1.99 mb charge is a debatable thing. However the etf isn't.

27. Fanboys Suck

Posts: 609; Member since: Dec 12, 2008

Yes. I was referring to the ETF. I agree with you on the $1.99/mb issue.

20. dongdou

Posts: 49; Member since: Jan 18, 2009

I agree with Verizons decision to raise the ETF. The reason is good business. If I had a company where I make a money on a product i sell cheaper for being with the company two years, I'm gonna make sure I get my money that I'm putting into this deal as well. If i am getting taken for less money thats bad business. So its fair when you think a company pays FRP for a phone for example BB storm2 FRP 539.99 and you buy it for 179.99 with 2 year contract. if you terminate early for 175.00 thats 354.99 that is -185.00 the company loses. as a customer your thinking "Well I cant sell it for 539.99" but its like buying a car off the floor depreciation. It still doesn't mean that the company didn't pay that for the device.

13. david_the_gom

Posts: 114; Member since: Dec 20, 2008

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...

15. gba2000

Posts: 49; Member since: Dec 28, 2008

I think the ETF 350 ONLY should apply when customers uses BOGO deal. Otherwise, normal ETF.

19. E.N.

Posts: 2610; Member since: Jan 25, 2009

I agree 100%

22. Osukaru

Posts: 68; Member since: Jul 02, 2008

That is the crappyest reasoning i have ever heard of. Any Advanced device thats discounted is usually discounted more than $350 wether its BOGO or Upgrade

11. PapaJay224

Posts: 866; Member since: Feb 08, 2009

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.

Posts: 2610; Member since: Jan 25, 2009

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

Posts: 7305; Member since: Dec 05, 2009

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.

7. redstu36

Posts: 51; Member since: Sep 28, 2008

Trying to keep the resell market in check for Blackberrys.

4. AT&T

Posts: 1; Member since: Dec 20, 2009

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

5. dave412_4

Posts: 11; Member since: Dec 07, 2009

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

Posts: 193; Member since: Jun 09, 2009

*laughs* please see comment #8 listed under DonLouie

16. Jake15

Posts: 15; Member since: Nov 18, 2009

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

3. DonLouie

Posts: 594; Member since: Dec 22, 2008

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

6. E.N.

Posts: 2610; Member since: Jan 25, 2009

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

Posts: 193; Member since: Jun 09, 2009

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.

Posts: 2610; Member since: Jan 25, 2009

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

Posts: 866; Member since: Feb 08, 2009

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

Posts: 49; Member since: Dec 28, 2008

What if they have no problem with network or iPhone?

17. E.N.

Posts: 2610; Member since: Jan 25, 2009

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

Posts: 235; Member since: Dec 19, 2009

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

32. Russki

Posts: 45; Member since: Dec 26, 2009

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*

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