FCC Demands Answers from Verizon on Fees

By  |  Friday, December 4, 2009 at 5:09 pm

The Federal Communications Commission (FCC) sent a letter to Verizon demanding answers about why it increased early termination fees for smart phone users as well as whether customers are charged for inadvertently accessing Verizon’s Internet services.

At dispute is that Verizon doubled early termination fees (ETF) for new customers that signed up to its wireless services with a smartphone. The company also charged a $2 fee of a number of customers who accessed its mobile Web by inadvertently loading their browsers.

A Verizon spokesperson responded to the inquiry, telling Gigaom, “Nobody is required to pay an ETF. You always have the choice of buying a mobile phone at full price with no ETF. Or you can buy a device at a discount with a 1- or 2-year contract. If you stay with your contract, you don’t pay a fee at all. We’ve heard from very few customers who accidentally accessed their web browsers, and we immediately credited them $1.99 per month for the problem.”

Of course, that response dodged the question about ETFs doubling for smart phone customers. This is just my guess, but it might have something to do with the recent availability of the Droid.

However, Verizon will have to respond to the FCC, which has increased its role as a consumer watchdog. If this is how the FCC is going to act going forward, I’m pleased – so long as the industry’s position is respected as well.

 
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3 Comments For This Post

  1. L1A Says:

    Easy answer “we need to get some money back for the $700+ phone we gave these people almost for free or $100-$200 down payment”. Can’t believe we have stupid people working for the government. Oh wait, I can.

    Case closed.

  2. Duker Says:

    no doubt, everyone will cry when they have to pay big bucks for their new phone….

  3. gnomish Says:

    Actually its not totally a slam dunk. First off verizon doesn’t really pay that much for the phone. The price they claim is “full retail price” is actually a price that includes a markup so they make a profit. The fact is they order in such volume that the real price is 20% to 50% lower than their “full retail price.”

    In addition almost all of Verizon’s answers to ETF policy relate to someone staying on their network. Buying a phone at full retail, getting an upgrade at discount, or just sticking out a contract are all Verizon wins because they get those service fees.

    The problem with ETFs isn’t a broken phone on a network you want to stay on. The problem is that leaving the carrier for another becomes very cost prohibitive. Especially since we are talking about per line so family plans are pretty spendy to cancel. But with that barrier to switching to a competitor why should Verizon improve customer service or policies to be more customer friendly?

    Point of fact they consider a customer who signs a contract a “loyal” customer. So when they convince people to upgrade they see it as increasing the “loyalty” of their customer base. That’s all they want.

    As far as the 1.99 mb charge most people saw they are lying through their teeth. Used to work there as a customer service and as a sales rep and when they instituted that policy almost every customer began to see that on their bills. Figure 80 million people. Charge 25% of them this fee for accidentally bumping the web button. That is 39.8 million dollars of extra revenue. Given my in-store observations 25% is about right.

    It’s also a low enough charge that most people will just pay it without saying anything. Plus look at all the phones. Verizon and ATT both make it so the center key will open the mobile web. That used to be the menu key. Hmmmm accidental? yea right.