Verizon on FCC hot seat about raising ETF?

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

Recommended Stories

Loading Comments...
FCC OKs Cingular\'s purchase of AT&T Wireless