Verizon updates its ETF policy, now it will be a bit more expensive to duck out of a contract

Verizon updates its ETF policy, now it will be a bit more expensive to duck out of a contract
America’s largest wireless carrier has made some significant changes to its early termination fee schedule, which is now in effect.

Under the old schedule, the initial early termination fee of $350 would be reduced by $10 per-month as a two-year contract progressed. Under the new schedule, the ETF remains at $350 for the first seven months of the two-year contract period.

Starting at the eighth month, and through the 18-month mark, the ETF will reduce by $10 per-month. Beginning on month 19, and through month 23, the fee is reduced by $20 per-month. This effectively increases the final ETF at any given point during a contract, especially during the first year.

During the first year, an ETF will now only be reduced by $50, making the cost of breaking a contract $70 more expensive than under the old schedule. Canceling 18 months into a contract, the ETF is $80 more expensive, and at month 23, the ETF is $30 more expensive.

While motivations for the change could be argued from a variety of angles, this is likely aimed squarely at competitors that run promotions agreeing to pay off early termination fees for customers that switch away from Verizon. Frankly, given the gains that T-Mobile has been making the past two years, it is a safe bet this change is aimed directly at Team Magenta.

How big a dent could this make? Assuming that over the past year-and-a-half, T-Mobile was able to lure away at least half-a-million Verizon customers, the dollars add up.  If you were to measure the cost of paying off the ETFs of the last 500,000 customers who made the switch one year into a two-year contract, the ETF costs would be roughly $115 million under the old schedule. Based on the new fee schedule, that cost would be $150 million. Even in an era where businesses make billions, and governments spend trillions, $35 million is still real money.

The new ETF structure applies to feature phone customers too, with the fee stating at $175, declining by $5 per-month beginning at month eight, then $10 per-month at month 19.

Anyone that signed a two-year contract with Verizon before November 14th is obligated under the old fee structure.

source: Verizon via Droid Life

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18 Comments

1. kanagadeepan

Posts: 1267; Member since: Jan 24, 2012

So BigRed... Now You accept that, you are really scared, right???

2. PullMyFinger

Posts: 2; Member since: Oct 17, 2014

T Mobile will pay up to $700 per line for switching over.

8. DnB925Art

Posts: 1168; Member since: May 23, 2013

Isn't that the total for both the phone (trade in) and the ETF? With Verizon, for example, since in most cases you can't bring a phone over to T-Mobile (because of either CDMA tech or carrier locking) T-Mo will pay for the ETF and the value of the phone that you trade in.

10. sgtdisturbed47

Posts: 969; Member since: Feb 02, 2012

That's only if the trade-in is valuable enough.

3. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

So rather than to try to compete with T-Mobile on cost or with better plans, they punish their own customers. Stay classy Verizon.

4. Kaddisfly

Posts: 1; Member since: Apr 18, 2014

This is probably more to do with fraud prevention than it is about being scared of competition.

6. Penny

Posts: 1859; Member since: Feb 04, 2011

Lol the only thing this has to do with is money, and keeping more of it. Any other benefits or drawbacks are just side-effects.

7. JunitoNH

Posts: 1946; Member since: Feb 15, 2012

Agree, Verizon is as worried of the T-Mobile as they are of sprint. Quarter after quarter, they keep adding to their base.

16. downbeat4

Posts: 94; Member since: Dec 03, 2010

$45 for unlimited talk /text or $95 for unlimited talk/text and 10gb of data isn't "better" enough? 30-90mbps in RI...It's worth every penny...even with the old pricing.

5. Penny

Posts: 1859; Member since: Feb 04, 2011

The customers are just pawns. Verizon feels so comfortable that it doesn't even consider the possibility of losing customers. They think they own them, and the customers perpetuate that mindset with their dollars. Sad to say I'm also a long time Verizon customer, who hates them but sticks with them (because of family plan and coverage).

9. DnB925Art

Posts: 1168; Member since: May 23, 2013

So because a change in ETF policy is considered a significant change in contract, can a user now quit Verizon without an ETF fee for the next 30 days? I know on Sprint a change in the contract terms, you can opt-out without an ETF within 30 days. Irony?

12. tacarat

Posts: 854; Member since: Apr 22, 2013

Nope. They're not making it a retroactive change. It'll only affect new contracts, such as the one you sign "next time". The last one will stay as is so as to not trigger escape clauses.

14. QWIKSTRIKE

Posts: 1459; Member since: Mar 09, 2010

Very clever......This still doesn't matter then "if" you were in a plan and wanted to leave.

17. DnB925Art

Posts: 1168; Member since: May 23, 2013

Ah. Bad reading comprehension on my part. I didn't read the very end of the article. My fault.

11. QWIKSTRIKE

Posts: 1459; Member since: Mar 09, 2010

@DNb925aRT....GOOD QUESTION....but probably so. All you people on Verizon have just been given an escape clause if you don't agree to this.rofl

13. Neo_Huang

Posts: 1067; Member since: Dec 06, 2013

Dang. My contract ends on November 26th.

18. DnB925Art

Posts: 1168; Member since: May 23, 2013

Try to see if you can upgrade early. Since you're so close, they may let you. Then you buy yourself another 2 years.

15. bosoxfan316

Posts: 5; Member since: Apr 02, 2013

This has everything to do with fraud prevention. Technically as sales reps if the customer doesn’t keep their service open for at least 6 months, we lose out on the commission of that sale. It’s supposed to either help with that or push people into edge where the phone only has to be active for 30 days for us to get paid.

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