Verizon to raise early termination fees for 'advanced devices'

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Nov-05-2009

Verizon to raise early termination fees for 'advanced devices'

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CONTENTS:

If you're thinking about buying a smartphone from Verizon ( NYSE: VZ ) Wireless on a new 2-year contract just so you can pay the early termination fee (ETF) and sell the extra handset for a profit on eBay or Craigslist, you had better get on it. (More...)
One poster mentioned giving the device back. (More...)
Even though the Droid is hot, it'll hardly rock a year from now. (More...)
"Our continued aggressive network investments provide customers with a 3G network advantage at home and on vacation." (More...)
At the time, it appeared ETF'''s days were numbered -- or, at the least, canceling early was less financially prohibitive.'' (More...)
The average subsidy of a wireless handset in 2008 was $14.33, so a $175 fee is already more than 10 times the average subsidy. (More...)
It is more about protecting against fraudsters looking to make a quick buck by flipping the phone and selling at a profit and not REAL customers who will stay or go based on service quality. (More...)
BGR pointed out that a lot of consumers try to '''work the system''' by buying new BlackBerrys on sale, opening a second line to get a new''advanced phone,''paying the cancellation fee then selling the device on eBay for twice as much. (More...)
ETF charges have been a hot topic with wireless carriers, consumers, and the government. (More...)
Because the subsidy Verizon pays is higher on smartphones. (More...)
Andir, your math is flawed. you still have to pay activation ($36) and one month service, lets call it $75 for data/voice/text. (More...)
Interesting, though, that the same phones, unlocked, in GSM, are available to the rest of the world for about half the 'real' price we're asked to pay. (More...)

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If you're thinking about buying a smartphone from Verizon ( NYSE: VZ ) Wireless on a new 2-year contract just so you can pay the early termination fee (ETF) and sell the extra handset for a profit on eBay or Craigslist, you had better get on it. Starting November 15, Verizon Wireless will be bumping up their ETF for "advanced devices" to a whopping $350. On the upside, Verizon will drop the ETF by $10 for every month a customer stays on their contract. It's not clear what "advanced devices" means, but it's a good bet that the term covers higher-end hardware, like smartphones. The decision to increase the fee isn't going to go over well with a lot of people, especially those that want to keep the option of dropping VZW for a reasonable ETF. But, it does make sense. [1] In (presumably) an effort to discourage potential Droid-flippers from just purchasing the phone on contract only to cancel that contract and sell the phone online, Verizon has been planning to double the cancellation fee on "advanced devices". That's right for advanced phones such as the Droid and similar smartphones, the Early Termination Fee will begin at $350 and decrease by $10 per month per line, starting November 15. We can't help but assume that the only reason this ETF is warranted is to prevent anyone from flipping their fancy new Droids on eBay for profit, but it still seems the penalty is a bit harsh. Just when we thought contracts were becoming more fair by way of prorated ETFs, this comes out of nowhere and blindsides everyone.[2]

The move doesn't even seem coincidental, with new users flocking to the wireless carrier thanks to Motorola's swanky new DROID smartphone. Starting November 15, customers who cancel their contracts early will be faced with an early termination fee of up to $350 USD per line. This only applies to devices the company deems as "Advanced Devices;" Verizon did not define the terminology although its assumed that it applies to smartphones and netbooks. According to an obtained document announcing this new ETF change, the policy applies to both one and two year contracts; the fee kicks in if the service is disconnected prior to completing the minimum term.[3] Wireless provider Verizon is poised to double its Early Termination Fee opnbrktETFclsbrkt for contracts associated with smartphone devices. Leaked documents show that it will now cost $350 instead of $175 starting on November 15th if subscribers end their contracts immediately, although each month of the contract served will decrease that fee by $10. While it is not known which devices this new higher fee will apply to, it is likely to be all smartphones offered by Verizon, including BlackBerries and the upcoming Android-powered Droid from Motorola. Verizon is suspected of introducing the higher ETF to keep subscribers from profiteering by selling their subsidized smartphones to other individuals. It also helps guarantee that these more lucrative customers stay on their contracts and generate profit before they leave the service.[4] Up until now Verizon's cancellation fee was only $175 meaning that you could've signed a new contract for an expensive smartphone, break your contract and put it up for sale on eBay (for example) getting you a little profit along the way. Big Red has gotten smarter and doubled their early termination fee, charging $350 to those who break their contracts signed after November 15th or at least that's what'' leaked document says. Our good folks from BoyGeniusReport have managed to get their hands on an internal Verizon memo where they say that "Beginning 11/15/09, customers purchasing an Advanced Device with a 1 or 2 year service agreement will be subject to an ETF of up to $350 if they disconnect service prior to completing the minimum term.[5] We suppose we can't really fault Verizon too much for wanting customers to honor their contracts rather than paying an early termination fee (ETF) of around half the phone's value and then selling the handset for a profit on eBay, but our natural dislike of ETFs is perking up this morning. ''According to a leaked slide that found its way to the BGR, Verizon are now planning to charge up to $350 in termination fees on "Advanced Devices" we're guessing they mean smartphones or high-end featurephones whose owners don't complete the full term of the agreement.[6] SlashGear have recently pointed out that Verizon Wireless have recently increased the cancellation fees when canceling contracts for'''Advanced Devices'''. Chances are these "advanced devices" are high-end smartphones and laptops, Verizon are now looking to charge up to $350 for an early termination, however this decreases by $10 per month completed. Obviously the reasons are financial, however many believe this has been brought on prematurely due to people taking Verizon up on their buy-one-get-one-free BlackBerry deal, it is thought that some people exploited this deal by terminating the contacts, paying the fees and then selling the handsets at a profit. To be honest I feel Verizon are well within their rights to charge large amounts for early terminations, at the end of the day an agreement was made which has not been fulfilled, check out SlashGear for more information.[7]

If you are thinking of pulling a fast one with the new BlackBerry Storm 2 Verizon BOGO deal by selling the handset on eBay and then cancelling a line you just may like to know that Verizon Wireless is rumoured to raise their ETF for high end handset reports the Boy Genius Report. Apparently the raised ETF will begin as of the 15th of November and will cover high end handsets such as the Verizon BlackBerry Storm 2 and the Motorola Droid to $350. Word has it the ETF would then decrease by $5 per month, but this is all speculation at present and thus far hasn'''t been confirmed but it would make sense considering how easy it is to rip off a carrier by getting a new smartphone, cancelling and paying the early termination fee and selling the handset on at usually a high profit.[8] we speculated that Verizon could have had some plan in the works to raise the early termination fee (or ETF) to $350 as a measure to stop scammers from canceling their agreements, paying the ETF, and selling their phones for much more money on eBay, or through some other means. Boy Genius Report has obtained a document which confirms the increase in ETF on 'advanced devices,' or smart phones like Motorola's upcoming DROID. The new policy is expected to begin on November 15th, 2009 and is applicable for both residential and business customers. If this seems like a complete bummer, just keep in mind that the ETF decreases by $10 for each month of service completed.[9] Were you thinking of registering a second line with Verizon, get a brand new BlackBerry Tour or Storm 2 and then flog it off on eBay? Well, it looks like Verizon has caught on with the game, and introduced an ETF (Early Termination Fee) of $350 on "advanced devices". The ETF will be reduced by $10 for each month of service completed, so it's not all that draconian, but it will serve to deter folks from registering just to sell the phone.[10] The $350 ETF will decrease by $10 for each month of service completed." It is not immediately clear what "advanced devices" Verizon is referring to, though the term sounds suspiciously Droid-y. In Verizon's defense, the new fee seems aimed at people who purchase a new phone, cancel their service, pay the current $175 ETF, and resell the phone at a profit on eBay. While I can't blame them for attacking that abuse, actually charging someone $110 to leave a contract with just a month remaining is clearly over the top.[11] The $350 ETF will be decreased by $10 for each month of service completed. While it's unclear which phones fall in the "Advanced Device" category, we're pretty certain that the Droid is one of them how could it not be considered "advanced"? Current Verizon service terms are still in effect: The ETF is $175 and it decreases by $5 for each month of service completed. Of course, the new policy isn't a deal-breaker for folks eager to get their hands on the hottest smartphone this Autumn. Other would-be Droid buyers should think in advance about the cost of breaking their Verizon contract. As the publication noted, the new rate means that canceling a two-year Verizon contract a month before it's set to expire incurs a $120 ETF.[12]

The company added that the fee will be reduced by $10 for each month of service completed -- meaning the penalty for a customer with five months of service would be reduced $50 to $300. Carriers have long subsidized devices to keep retail costs low, earning profits on the wireless service -- but Verizon said its highest-end smartphones -- like its new Motorola Droid -- are getting more expensive. "This has to do with the cost we pay for the device," said Jim Gerace, a Verizon spokesman. He added that fees on Verizon's standard handsets will stay at $175 -- and decrease by $5 a month for each month completed.[13] Verizon will prorate the cost of the early termination fees by offering $10 off the total cost of that fee based on each month a contract is kept active. With that $10 discount customers will still pay $110 to terminate their two year contact when only one month or even one day of service remains. The new rates go into effect on November 15th 2009 and will only apply to new devices purchased by new customers or customers looking to upgrade their contact with a new device. Much for buying devices, cancelling your contact and flipping them on eBay for a profit, which is probably half the reason for the rate hike.[14] In what appears to be a change, the fee will now drop by $10 for each month of the contract that has gone by. That could be good news for some customers as it now means it will be cheaper to end a contract after the 18-month mark. It appears the most likely reason for the change is to make it less worthwhile for customers to get a new handset solely for the purposes of immediately canceling the contract and selling the phone on at a profit (but for less than its unlocked price). That had become a particular concern thanks to a recent offer allowing Verizon customers to buy two BlackBerry Storm 2 handsets (each with a service deal) for the price of one. It'''s somewhat surprising it taken so long for the early termination fee to get to this point.[15]

The carrier is raising early termination fees on Novermber 15 to $350 for "advance devices" only. Clearly VZW is targeting users who were abusing the buy one get one free BlackBerry deals and those that figured out that it was cheaper cancel their current contract and pay the $175 ETF than to pay full retail for the hot new handsets like the Droid. The leaked document doesn't exactly spell out which devices qualify as advanced, but chances are it's any BlackBerry, Android, or Winmo handsets.[16] Are you looking to get a smartphone on the Verizon network anytime soon? Make sure that you like it before you sign a contract, since starting November 15th, Verizon will be imposing a higher early termination fee--up to $350--on contracts for "advanced" devices. That means smartphones. Why would they do such a thing? Not just for the sake of greed. It's because of their "buy one Blackberry, get one free" promotion for the holidays. WIthout the ETF hike, this could have led to an exciting new way to subsidize your purchase of a sexy new Tour: get another Blackberry of any type on the second line, cancel it, eat the $175 ETF, sell it on eBay and profit from the difference.[17]

A new Verizon Wireless document has recently surfaced that increases the companies $175 early termination fee to an astounding $350. The new ETF will start on 11/15 and will apply to "advanced devices" although which devices will be included are still unknown, although I'd put my money on their high end smartphones which often cost the company hundreds of dollars above their sell prices.[18] If you remain a customer for six months, your ETF drops by $30 and you'll only pay $145 if you break the contract with said carrier. Verizon apparently believes $175 isn't enough to recoup expenses on advanced devices such as smartphones, which have a much higher retail cost. According to internal documents spied by The Boy Genius, Verizon Wireless is prepared to double ETFs to $350 starting November 15 -- just in time to cover all those holiday-driven smartphone sales.[19] If you thought about canceling a Verizon contract after the first month in order to resell the Droid on eBay, think again. The nation's #1 wireless carrier has sent out a notice to its sales channels announcing a doubling of the early termination fee (ETF) to a whopping $350. Beginning 11/15/09, customers purchasing an Advanced Device with a 1 or 2 year service agreement will be subjected to an ETF of up to $350 if they disconnect the service prior to completing the minimum term.[12] Under the new agreement, which will be used for new contracts beginning Nov. 15, someone terminating in month 23 of a 24-month agreement would still owe a $110 termination fee, according to a short item today in Boy Genius Report. "Beginning 11/15/09, customers purchasing an Advanced Device with a 1 or 2 year service agreement will be subject to an ETF of up to $350 if they disconnect service prior to completing the minimum term.[11]

It has been confirmed by Verizon Wireless that they will charge up to $350 for early termination on advanced devices. From November 15th this charge will go into effect and the new improved termination fee will include a minute silver lining apparently according to BGR for every month of service completed, this means that the $350 will be reduced by $10.[20] If you thought $175 was a steep early termination fee to pay, get ready for some unwelcome news. In order to ward off scammers, Verizon Wireless is giving serious consideration to doubling its ETF to $350 for "advanced" -- read: expensive -- devices.[19] Verizon Wireless has confirmed that it is in fact altering its Early Termination Fee policy. Starting November 15, those purchasing "advanced" devices such as smartphones and laptops, will need to agree to a $350 ETF to get the subsidized price. Verizon Wireless has confirmed that it is in fact altering its Early Termination Fee policy. Starting November 15, those purchasing "advanced" devices such as smartphones and laptops, will need to agree to a $350 ETF to get the subsidized price.[21]

According to the memo, customers after November 15 who buy an "advanced device" (smartphones) can expect to pay a $350 ETF, though that total will decrease $10 a month every month a user's under contract. The BGR surmises that the change is to stop people from flipping subsidized smartphones over at eBay, though you can also be sure Verizon's forced migration to open devices and platforms has them eager to make up some of that lost revenue in other places.[22] The ETF will go down by $10 per month for each month of service. It is unclear what exactly an "advanced device" is, but it likely refers to smartphones. If true, the move represents a reasoned measure aimed at protecting the subsidy Verizon Wireless doles out for each of its high-cost smartphones, and likely would deter customers from opening a new line of service, paying for a subsidized device, canceling the line and then selling the device for a profit.[23] As you've probably heard, Verizon is about to start a huge BlackBerry sale. This sale will include some exceptional deals which, Verizon fears, are ripe for exploitation. In order to prevent customers from cancelling their line and selling their new phone on ebay for a profit, Big Red is about to hike their cancellation fee. Boy Genius has come across proof that Verizon will soon up their cancellation fee for 'advanced devices' from $175 to $350. That's certainly one way to discourage that sort of behavior.[24]

Given the number of ETF lawsuits that have occurred in the past I'd be willing to hold my breath over a future class-action over the new fees. Verizon, here's an idea, why not just charge the full retail value of the device (at the time it was purchased) if a customer leaves their contract early. If I pay $200 for a $399.99 phone I'm stuck with $199.99, this new contract could unjustly charge fees significantly above your cost of devices.[18] If you're new here, you may want to subscribe to my RSS feed. The industry practice was to charge between $175 and $200 for customers who canceled their contracts early. The fee exists to ensure that customers don't buy a subsidized phone and then just bolt without covering the cost with their monthly plan fee.[25] VZ gets their initial fees, and they get an ETF. I don't see they really "hurting" in that situation, subsidized phone or not. The non-subsidized price for the droid is $600 but they're selling for $200 after rebate and subsidy. If the $200 price + the old $175 ETF didn't cover the wholesale cost of the phone, they'd be losing money to people selling them on e-bay to make money. With a $375 ETF plus the $200 price, they're coming in close to the retail price of the phone. If the non-subsidized cost is $600 and the subsidized and rebated cost is $200 (with a 2 year contract) with a $375 EFT, the monthly reduction should be $15.65 not just $10 (ie: It should go down based on how long you have paid under the contract so the EFT is fully paid off at the end of the contract - At $10 a month, you still owe $145 after 23 months).[22] I can understand maybe raising the ETF and then lowering it at a quicker rate like other people were saying. I don't think they're hurting that much when people pay $175 + subsidized cost of the phone, and flip it. They make more than the difference back on people who purchase that same flipped phone, and activate it, off contract, on a plan that's just as much as the "on-contract" plan. Actually, if the phone gets activated on Verizon's network anyways, they make MORE money.[26]

You could go and buy a BlackBerry Tour for $150 with a 2 year contract and cancel the day after and pay a total of $325 for the device. Or you could purchase the device at a no-contract price of $449.99''' The math just doesn't add up even with the $35 activation fee. It looks like Verizon is smarting up to the fact that people are just flipping phones they purchase. I really hope they would come up with a different solution for the whole ordeal.[27] The ETF''will then see a reduction of $5 every month. The reason? Well, Verizon is trying to combat scammers who buy new high-end phones like the DROID or Storm2 on contract, cancel the line by paying the early termination fee, and then sell the phone for double or even triple the price they paid for.[28] The new increase in the cost to cancel is ridiculous to say the very least. Starting November 15th, anyone who cancels their contract early from Verizon will have to pay an early termination fee that can go all the way up to $350 per line.[29] Well, if you sign up for new service with Verizon beginning November 15 or later, that early termination fee is about to start hurting much worse. According to Boy Genius Report, Verizon is preparing to double its ETF to a whopping $350 if you cancel your service before your contract is up.[30] According to a document leaked to the Web site Boy Genius Report, Verizon Wireless has plans to double its early termination fee on "advanced devices." Verizon did not reply to requests for comment by press time, but if the documents are accurate, subscribers will be charged $350 to cancel service before the terms of their contract are up beginning on Nov. 15.[31] The leaked memo also stated that the "advanced devices'" contract-termination fee will be reduced $10 for each of the months that a subscriber completes under contract. Even as Verizon did not specify "advanced devices," Andrew Munchbach of Boy Genius Report has conjectured that these would essentially comprise netbooks and high-end smartphones that run on the carrier, including the forthcoming Android-based Motorola Droid. Describing Verizon's move to hike of the termination fee as "outrageous," Josh Levy, of Free Press, said: "Early termination fees are universal across the industry, and they're universally detested by consumers.[32] It was bad enough having to shell out $175 when opting out of a 2 year contract with Verizon Wireless, now the wireless carrier has announced that they'll be doubling that amount on "advanced devices." I'm not quite sure what "advanced devices" means, although I'm willing to bet it's any phone with the words "Smartphone" or "Droid" associated with them.[14]

A memo leaked from Verizon Wireless confirms that the company is increasing its early contract cancellation fees to as high as $350 for what it calls its "advanced devices."[33] Verizon To Double Wireless Early Termination Fee New charge, $350, applies to "advanced devices," a term that sounds awful Droid-y.[11] Verizon Wireless is going to double its early termination fee (ETF) later this month from $175 to $350 for users who purchase an "advanced device," according to the Boy Genius Report blog.[23] The up-front cost is $529 (the devices plus the ETF), and the devices seem to be selling for slightly more than that on eBay. With the $175 early termination fee, customers could sell the extra device and cover all of their costs plus put some extra cash in their pockets. With the ETF doubled, it's not as easy a win. If Verizon comes through on this, and I expect that they will, expect it to extend beyond their BOGO offers.[25] Again, it might not be totally profitable, but customers can still eat the $350 for the device and early termination fee and sell it on eBay. At that point I'm not sure Verizon has even covered its own costs on the device. That would give them less of an incentive to offer BOGO deals.[25]

In the event a customer receives a Direct Mail Letter which references the up to $350 ETF and contacts Verizon Wireless, Representatives can assist the customer and explain the up to $350 ETF is for advanced device purchases effective 11/15/2009.'' The higher ETF associated with advanced device purchases fairly reflects the higher costs associated with offering feature rich advanced devices to customers at attractive prices and investing in our network to support these devices.[34] An internal document has been leaked confirming that Verizon Wireless will raise the ETF on customers that purchase what it classifies as an "Advanced Device" (smartphone) from the carrier to $350 beginning on November 15th.[34]

Here's the word directly from Verizon Wireless spokesperson Jeffrey Nelson: We are raising the ETF for contracts associated with the purchase of an advanced device (ie smartphones, PDAs, netbooks) at a reduced price. This change ONLY applies to new contracts beginning Nov. 15, and ONLY when the customer ends serivce before the term is up.[21] This is to stop people from purchasing expensive smartphones at their heavily subsidize contract prices and paying the ETF in order to get the handset cheaper. Something ATT would've been smart to do when so many customers used the same method to rip them off and get cheaper iPhones. Verizon is simply learning from those mistakes and planning accordingly. If this was to stop customers from leaving for the iPhone then it would be the new standard ETF for every phone. Sounds like their new contracts will be 3 years long.[35] Verizon LOVES 2-year contracts. If you call up with a reception problem, their solution is a new handset and new 2-year contract. Fix the problem? HAHAHA! It's The Network (TM) -- how could there be a problem? A higher ETF keeps more people under contract -- right where Ivan wants you. It wasn't until very recently that you could even start service without signing a contract EVEN IF YOU BROUGHT YOUR OWN VERIZON APPROVED HANDSET. The handset is how they lure people into the services they sell. It's like the free first hit. (and to many people a cell phone is crack).[22]

One would sign up for the iPhone service and cancel the two-year AT&T contract after the first month to get the 16GB/32GB iPhone 3GS for $480/$580, respectively: $199/$299 for 16GB/32GB iPhone 3GS + $36 activation fee + $175 ETF + $70 one month AT&T service. If you are willing to pay this sum, you can walk away with a phone that has no contractual tie-up so you can sell it on eBay, unlock it for use on any 3G GSM network, and what not.[12] The ETF does decrease by $10 for each month you remain a loyal customer, which means you could be looking at a slightly more palatable $230 halfway through the typical two-year contract. ''Still, it's significantly higher than the new-line cancellation fee of $175 which some unscrupulous subscribers were taking advantage of to pick up, say, a buy-one-get-one-free BlackBerry, activate a second line, then cancel it and sell on the handset for a profit.[6] The ETF will decrease by $10 for each month the customer remains with the carrier during the 1 or 2 year agreement. The increase will apply to all smart devices sold by the carrier and is seen as a way to retaliate against customers that would work the system set up by the carrier with its frequent BOGO (Buy One, Get One Free) offers (e.g. BlackBerry devices) and sell smart devices for profit by taking out a second line, acquiring another device, then paying the $175 ETF in order to profit later on the sale of the second device on auction sites, making the ETF increase a deterrent against the above practice.[34]

The ETF will be $350 and will decline by $10 a month. Our ETF for all other devices remains at $175, which was set long before people were walking around with expensive, sophisticated, mini-computers in their pockets. ETFs allows customers to have it either way: They can have no ETF on a month-to-month service and pay full retail for their device. OR, they can get a greatly discounted device by having an ETF. Here's the math: $179 for a Storm2 with 2-yr contract -- even if you break the contract very early on before the first $10 incremental decline, you're paying $529.[21] Even with the $175 fee plus the first month'''s service charge, Verizon could still be out of pocket in some situations given the subsidy it pays manufacturers. At $350 it'''s much less likely people will find a way to make a quick buck and, even if they do, Verizon usually wouldn'''t be out of pocket. The big downside for customers is that if you find a handset isn'''t to your liking, or are disappointed with the service provided by a network, it'''s now much less likely you'''ll be able to afford to get out of the deal before its scheduled conclusion.[15]

The change may be designed to deter buyers from getting a subsidized phone upon release and then selling it at a profit. At the moment, a customer who wants to cancel their contract before its scheduled completion date (usually two years) must pay a $175 early termination fee.[15] Yep, had the same experience with T-Mobile. after a year and 10 months of crappy service, failed phones, and excuses, I finally couldn't afford to have my business out of reliable contact with customers and cancelled.and got slammed with a $200+ bill. I told the collection agent they sicced on me "mark me as refuse to pay". Where do these people get off? If my cable company couldn't keep the set on reliably, I'd cancel and get a dish, and they'd have no chance of putting on an "early termination fee". All this for limited phones, and, compared to the rest of the world, limited and unreliable service.[30]

For a few minutes of work I made 150$. Verizon lets say they paid $300 for EACH blackberry. Thats $400 loss up front. At the end of the contract I will have made them appox $7.33 per month in data revenue. Clearly not that much considering they have A LOT of data coverage. They need to figure something out if they are going to be subsidizing phones so much. This works out great for 99% of the people that research and buy the phone (you do have 30 days to decide if you want it). The only people this DOESN'T work out for is the ones that SIGN A CONTRACT THEN CHANGE THEIR MIND! Military get out of the contract, if you move to a zip code that doesn't have coverage, no termination fee etc.[26] Not so says Verizon. '''This has to do with the cost we pay for the device,''' says spokesman Jim Gerace. Verizon customers, he notes, can buy a subsidized Blackberry for as little as $99. What Verizon pays to Blackberry-maker Research In Motion, however, '''is far north of that,''' he says. The wireless industry has long subsidized devices to hold down retail costs, then charged customers a penalty if they exited their contracts early.[36] Customers can buy one phone and get another of equal or lesser value for free. That means more contracts for Verizon, since a two-year contract is required for a subsidized phone. If a customer wants two BlackBerry Storm 2 devices, they'd have to sign two two-year contracts in order to get them both for $179.[25]

Having worked as a purchase manager in the industry I can assure you Verizon isnt dropping $700 per Droid with the hopes of recuperating expenses. Your average industry Smartphone outside of a contract is bought for around a 10-15% margin, sometimes higher when they are very new, so a $700 phone will cost a company buying 20 or 30 of the devices around $550 when they are brand new on the market.[18] The current $175 isn't enough to cover the difference between the cost of the phone and what Verizon sells it for under contract.[26] You sell someone a $600 phone for $200. They turn around and sell that phone on EBay for $500+ and just pay $175 to break the contract they signed to get the phone cheap. This person ebaying the phone made 500 - (200 + 175) = $125. I don't like early termination clauses, but you pretty much have to have them to avoid someone doing just that.[26]

Example: The Blackberry Storm 2. Verizon sells it for $179 with a two year contract and, soon, a $350 ETF. Or you can pay full retail -- $539 -- with no contract or ETF.[36] The $350 will decrease by $10 per completed month of service over the life of the agreement. About two years ago, forced by lawsuits and regulation, AT&T, VZW, T-Mobile and eventually Sprint began pro-rating their ETFs and stopped requiring contract extensions when their customers made changes to their calling plans.[37] Verizon is kind enough to lower the $350 ETF by $10 every month which still leaves you with $110 ETF if you cancel the day before your contract ends. I was talking to a friend about this exact loophole a last week and it truly does not make any sense.[27] Oh, there's a little bone thrown in there for you: For every month of your contract fulfilled, the company knocks $10 off the ETF. Great deal? Hardly: Cancel your 24-month contract in the 23rd month and you're still on the hook for a $120 termination fee.[30]

Free Press' Josh Levy said the move was "outrageous." "In fact, the average subsidy of a wireless handset in 2008 was $14.33," he said, "so a $175 fee is already more than 10 times the average subsidy. Under threat of increased regulation from Congress, all four of the major wireless carriers in America voluntarily began prorating their termination fees over the life of an average two-year contract.[33] Verizon Wireless said it plans to double its early termination fee for "advanced phones" -- from $175 to $350 -- starting November 15.[13] Verizon Wireless has just gone evil. The company has announced that they are going to charge as much as USD 350 as early termination fee from their customers. These high fees would be application on advanced devices which means the recent generation of smartphones.[38] There is one small good thing however, the charges would become USD 10 less with each month of usage. This new policy would be applicable from November 15 which is after the launch date of Motorola Droid. This policy is obviously aimed at customers who buy the new popular smartphones and sell them on eBay or other stores after paying the termination fee. Most of these devices are unlocked before sale.[38]

The documents did not specify what constituted an "advanced device," but it is speculated that Verizon is referring to smartphones. Verizon is currently offering a buy-one, get-one-free sale on its BlackBerrys. That has sparked a grey market trade in the devices, where subscribers purchase the handsets from Verizon, pay the $175 cancellation fee, and then resell the device on sites like eBay for well over what they paid for the device.[31] MacDailyNews Take: "Verizon's definition of "advanced device" is whatever iPhone-lookalike-not-workalike they're dangling this month ( LG Voyager, HTC Touch, BlackBerry Bold, Samsung Omnia, BlackBerry Storm, Motorola Droid) in order to dupe the ignorant. Munchbach reports, "This new 'improved' fee does have a minute silver lining (if you can even say that): for every month of service completed, the $350 sum will decrease by $10."[35]

The standard ETF is currently around $175 to $200. It was established years ago, when expensive smart phones, netbooks and other advanced devices didn'''t exist, Gerace says. Gerace says ETFs on other Verizon wireless devices, such as standard cellphones, won'''t change.[36] Now, however, Big Red is evidently gearing up to pull a 180, with the slide above showing a $350 ETF for "advanced" devices (read: probably anything deemed a smartphone). The newly hiked rate will go into effect on November 15th, and while that $350 will decrease by $10 per month over the life of the agreement, this pretty much guarantees that you won't be adding a line, disconnecting and then flipping that phone on eBay.[26] You read that right, up to $350 per line to cancel your contract with Verizon. This applies to "Advanced Devices" only, meaning probably smart phones and such. This is a major policy change.[29] According to a recent Verizon Wireless memo, obtained by The Boy Genius Report blog, the early contract-termination charges of the company, for "advanced devices," are being hiked to $350.[32]

If you want to avoid the $350 ETF, best get your behind to Verizon Wireless stores before November 15.[21]

Here's a solution, Verizon: if you're so worried about losing money and customers but yet want to be fair about the ETF, demand a $350 ETF for only the first 4-6 months to ward off the potential flippers, and then drop the ETF down to the same cost as every other device. Enjoyed the story? Get the news and updates as we publish them.[2] Customers can buy a new phone on the cheap because the carriers subsidize some of the cost. If a customer breaks their contract, the carrier collects the ETF to help repay the cost of the handset, which the customer didn't pay full price for.[19] I don't turn and burn, but an ETF in theory should be going down. They can charge more for the phone if need be. Why should the ETF be going down when the phones are becoming much more advanced? It can't be cheap to build such a small device that acts as a phone, computer, GPS, camera, etc. Why would they want to charge more for the phone in exchange for a lower ETF? Offering subsidized phones for under cost is the main incentive for people to sign a contract, especially after their intial one expired. Sure, they could raise the price on phones and lower monthly rates a bit instead, but I'm pretty sure that most people would rather have lower initial costs instead of slightly lower rates.[22] Based on what I've read over on crackberry (concerning the BB bogo deals Verizon has) you can't buy a phone on contract from Verizon and then a few days later pay the ETF and keep the phone. If you try to keep the phone they will charge you the full price of the phone. I believe the only way to get around this is you have to fulfill 30 days of your contract.[26] HA, I left verizon (and the POS Treo) for the first gen iPhone. I was past my contract date and they tried to hit me with a 275 ETF. I told em to get fsck'd and show me the contract, they then claimed I made a verbal commitment and was therefore under contract, I again told them to get fsck'd and sow me the signed contract. They kept sending bills, I kept filing them in the trash. They then turned me over to a collection agency who tried to offer me a "settlement" for $50. I told them NOPE NOT GONNA HAPPEN, sent them a letter disputing verizons claims and told them I was under no contract and that until someone produces a contract with my signature, there was no way I would pay them a dime.[35]

The fact that Verizon doubled the ETF might indicate higher-than-expected upfront subsidies paid to Motorola. Such advanced hardware (5MP camera, twice the resolution of the iPhone, etc) probably costs more than an iPhone so Verizon could be paying higher than the estimated $400 in subsidies that AT&T pays to Apple.[12]

Faced with a possible $200/$300 termination fee, many are going to forego Verizon's crap phones and limited function CDMA network for something else. This is nothing more than a reaction to all those willing to pay the heretofore $150 termination fee, and switch to ATT in order to get the iPhone. Apple and ATT are winning this war.[35] Every carrier has one: If you want to get out of your contract early, you'll pay at least a hundred bucks for the privilege. The carriers justify it by saying you get a better deal on your cell phone when you make the initial purchase, but for many, hanging on to a crummy phone for two years just isn't worth it, and many people find that after the first year has passed, they want out of the deal (usually so they can get an iPhone). That termination fee is always painful.[30]

All four major U.S. carriers charge an ETF of $175 with two-year contracts. Most also pro-rate the ETF and drop it by $5 for every month that a customer sticks to their contract.[19]

In a move that could spark industry-wide change, Verizon is doubling its early termination fee--to $350--making it more expensive for customers to bailout on their two-year contracts with the carrier.[11] Washington (dbTechno) - If you want to cancel your contract that you currently have with Verizon Wireless, you may soon have to pay with an arm and a leg. Verizon is starting to actually increase their early termination fee, something that is not going to please customers to say the very least.[29] Ouch, that's gonna hurt. Some suspect that the policy change is in the works to prevent scammers who take advantage of buy-one-get-one-free offers, cancel the contracts, and make a profit selling the devices that they got for free (even after paying the ETF). I reached out to Verizon Wireless to confirm this policy change, but spokesperson Brenda Raney only said, "No comment."[19] Some people are taking advantage of Verizon's generosity. They're buying two handsets and then immediately canceling one. That costs them $175, but the profit is in selling the canceled device on eBay.[25] Smart phones should not be $600. they are ripping the consumer off. the cost of making these devices since the iphone (gen2) have been cut by neary 30% and yet they still love these wack-job gouging prices! A top of the line smart phone should be $450, tops (with every possible feature you could imagine). not $600+ yet, there are millions of people who keep falling for the higher prices scam all the time. Other than making sure the cost to manufacture doesn't exceed the selling price (and there are time when companies will intentionally do that), the selling price has nothing to do with the cost to produce.[22] Smart phones should not be $600. they are ripping the consumer off. the cost of making these devices since the iphone (gen2) have been cut by neary 30% and yet they still love these wack-job gouging prices! A top of the line smart phone should be $450, tops (with every possible feature you could imagine). not $600+ yet, there are millions of people who keep falling for the higher prices scam all the time. Prepaid is the biggest growth in the wireless industry because of it's low pricing, yet the quality of the phones are terrible-- many of the lower quality phones are nearly featureless (compared with smart phones).[22]

One poster mentioned giving the device back. I do think AT&T implemented this for the iPhone where if you cancelled the contract not only were you responsible for the ETF but also the FULL retail cost of the phone, as it should be. [22] The FCC will not take this lightly. Nor will the legislature. They've been warned about raising the ETF again. Raising this fee so high is not in any way fair. If it's about the cost of the phone, then make people give it back if they cancel their contract.[16]

More than likely the ETF increase has come to light as many users have been buying $600 or $700 phones for $200 then paying the ETF fee immediately to save a few hundred dollars on a phone outside of a contract, many of which end up on eBay.[18] A $200 or $350 fee to break the contract is actually pretty cheap considering that you are legally obligated for paying the entire two years whether you use it or not. Contracts work both ways.[3]

Last year Verizon reached a $21 million settlement with a group of customers who sued the company over the outlandish fees ( source ). In California, a superior Court judge ruled that the practice of charging consumers a fee for ending their contracts early is illegal and violates California law ( source ).[3] The fee, arriving just in time for the holidays, applies to customers who have a smart phone or other advanced device on a one or two year contract.[36]

As of November 15, early terminations on contracts with unspecified "advanced device"(s) will be subject to a fee of $US350. While that policy might slow eBay entrepreneurs just looking to make a few easy bucks on a resold Blackberry, it's devastating to the average guy who just wants to ditch his contract early.[39] Still, that's a $US110 termination fee in month 23 of a two-year contract which is clearly absurd.[39]

Rumor has it that starting November 15th, Verizon will raise its early termination fee for high-end smartphones to $350.[28] According to a leaked memo posted over at the Boy Genius Report, Verizon is preparing to double the early termination fee for customers who buy new smartphones via Verizon.[22]

Verizon sucks. There's another way to look at this: Maybe "early termination" also applies to when someone chooses to upgrade their phone to something different ''' such as going from a Blackberry to an iPhone before the Blackberry has been paid for. If I'm Verizon, I implement the new charge a few months before I start selling iPhone so that I can extort my existing customers who want to stay on the Verizon network but wish to move to the iPhone from whatever crappy handset they're currently using.[35] » I agree. VZ gets their initial fees, and they get an ETF. I don't see they really "hurting" in that situation, subsidized phone or not. It's because Verizon can't stand it when ANYONE makes a single buck of them. They want to rule your money, and give you nothing in advantages besides service in return. This type of stuff is way easier on GSM and happens so much more with GSM carriers, then Verizon. Trust me Verizon does not have a big issue with this. Yes I know GSM is used way more then CDMA. The problem is they can control it better on CDMA. Verizon closes any holes that are an advantage to customers, that's just how they roll.[22] I never thought of it that way. It still sucks that there is an ETF and that they are doubling it. People who are buying smart phones are paying a premium on data services so Verizon is already making extra off them. Not if the user cancels and pays the ETF within the first few months, which is what this is designed to prevent.[22] I never thought of it that way. It still sucks that there is an ETF and that they are doubling it. People who are buying smart phones are paying a premium on data services so Verizon is already making extra off them. -- The early bird catches the worm, but the second mouse gets the cheese.[22]

Even though the Droid is hot, it'll hardly rock a year from now. If you jump ship to another carrier in 12 months in order to get whatever phone will be making headlines in Fall 2010, you'll still have to pay a $230 ETF. It's called a lock-in and every carrier has it Verizon has only doubled it. [12] The documents note that the ETF will drop by $10 per month rather than $5. The same customer who sticks with Verizon for six months will have a $290 ETF to pay, rather than $145.[19] Verizon's prorated plan reduced the ETF by $5 each month, so if you wanted to cancel after month 20, you would have to pay only $75.[25] I am ordering it online Nov 6, paying the ETF of $175, taking the DROID to one of the MVNOs that use Verizon or Sprint (Hello Boost Mobile and your $50 unlimited everything plan).[26] Check out the listings for the Storm 2. They're going for more than the $175 cost, so it makes for a profitable reselling scheme. Then again, it's really a one-off thing where you can pocket $300 or so. I imagine it would be difficult to pull this off more than once. To combat this, Verizon is thinking about raising the ETF on high-end smartphones to $350.[25] A quick calculation reveals you'll have to fork at least $655 in cash for the privilege to do so: $199 for the Droid + $36 activation fee + $350 ETF + $70 one month service ($40 Nationwide voice plan + $30 Email and Web for Smartphone data plan).[12]

I had broken one before to get a different phone, but that was only because the ETF was $170 allowing me to still be getting a new phone for a good deal. If I was currently under a contract and they did this, I don't think I would ever be breaking it for whatever reason. $350 is too much for me and it dropping a measly 10 for each successive month, that still doesn't make me want to think about possibly breaking my contract.[40] Starting on November 15th, if you sign a contract with Verizon and decide to terminate it early, you will have to pay $350.[41] If you're looking to break out of your contract with Verizon, better do it before next week, as the maximum penalty will be increased to $350. That goes down, of course, $10 for every month of the contract that you've already completed.[40]

Retail prices often have NOTHING to do with the actual price paid, especially for a big dog like Verizon. I would bet they are paying $250-$275 for the high-end handsets. It has EVERYTHING to do with contracts.[22] Look at what many cell phones cost without a contract, especially the newer nice stuff. Some of these phones are $500, but you can get them for like $49 when agreeing to the contract.[3] Wireless providers sell subsidized phones at a loss in exchange for making the money back on subscription payments. You assume they are selling subsidized smartphones at a loss. I've yet to see independent data that proves this. It's unrealistic to expect them to sell (or give away) a phone at less than cost yet have no recourse against someone who doesn't honor the contract.[22] The telecom industry claims the fees are necessary to recoup the costs of producing, selling, and marketing the handsets. Critics say the fees are designed to keep customers from shopping around for the best provider, by locking them into a contract with steep charges.[33] Verizon is to double the fee it charges customers to cancel their service contract.[15]

I don't believe that Verizon is going to charge a ETF for upgrading a phone either. They will just charge you full price for the next phone. The ETF should only come into play when you tell them to cancel service. Another thing.[26] Re: Great timing. What does that accomplish? It essentially charges the ETF up front and raises the total price that most people would end up paying over the life of the phone.[22]

A lot of people bought the iPhone from AT&T at the subsidized price of $199. Then they paid the ETF of $175, then turned around and sold the iPhone on ebay or craigslist for $600+. Yea, I think they are doubling the ETF to prevent this from happening with the Droid.[22] Verizon is in the midst of launching several high-profile gadgets, including Research In Motion's BlackBerry Storm2 and Motorola's Droid. Such devices typically sell to consumers for around $200, a price that includes in some cases a subsidy from Verizon of as much as $300.[23] Sell the Droid for $500+, which is reasonable, and you'll still turn a profit. This just means you have to have a bit more cash to scam Verizon.[16]

"Our continued aggressive network investments provide customers with a 3G network advantage at home and on vacation." Verizon further noted it has invested more than $50 billion since its inception to increase the wireless voice and data coverage of its national network and to add new 3G services like Mobile Broadband and V Cast. [42] Nov 04, 2009 (Close-Up Media via COMTEX) -- Verizon Wireless said that it is investing in Barnstable County, Massachusetts to stay ahead of rising demand for wireless voice, 3G multimedia and Internet access. Regionally, Verizon reported it has invested more than $2.5 billion into its New England network over the past nine years, including more than $105 million during the first six months of 2009.[42] "We've invested billions of dollars into New England believing that every cell phone is only as good as the network it runs on," said Richard Enright, director for Network System Performance for Verizon Wireless.[42]

If you're in the market for a new smartphone on Verizon Wireless' network, I'd make sure to buy before November 15.[19] "Verizon Wireless' 3G network coverage across New England is unparalleled," said director for Network System Performance for Verizon Wireless, Richard Enright.[43]

If it can'''t win customers''' loyalty through great devices and service, Verizon Wireless ( NYSE:VOD, NYSE:VZ ) may do so through''exorbitant''early termination fees.[37] Verizon provides the phone and service, and the consumer pays for the phone, service, and early termination fee.[22] On various message boards and blogs, like MDN, I see post after post of how great Verizon is and how they have the best coverage, blah blah blah. Now after a stunt like this, why would anyone want to pay money to a company with so little integrity and such obvious contempt for their customers? ATnT may not be perfect, and the iPhone may not be flawless, but they sure don't have to double their early termination fees in order to retain customers.[35] Like the whole Macpadd.com ordeal, we like to keep our readers informed when something smells foul. Verizon is beginning to cross into that foul territory by spiking its early termination fee.[3]

Verizon is spiking its early termination fee just in time for DROID's invasion.[3]

There's nothing official regarding the doubled early termination fee or what exactly an "advanced device" is, although we may have a clue that everything more expensive than $300 will fall into that category.[5] The up to $350 ETF for advanced devices is not to be discussed with customers prior to the 11/15/2009 launch.[34] The $175 ETF decreases by $5 a month and the $350 ETF decreases by $10 a month for each full month the customer completes.[34] "The $350 ETF will decrease by $10 for each month of service completed," the company said.[3] The company stated the $350 will decrease by $10 after each month fo completed service. Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages.[29]

According to the documents, the new cancellation fee will decrease by $10 for every month of completed service.[31] The new fee does decrease every month by $10, which is a plus. You know what this change means, right? You have a week and a half left to scam Verizon.[16]

Verizon will provide a $10 prorated fee per month, but that still means you'll pay $110 if you have one month left on your 2-year contact.[18]

I have to agree; it's fair for Verizon to expect people who pay way less than the device cost them to honor their contracts.[16] Alex, the devices cost no where near $700 for Verizon, AT&T or any other carrier to purchase.[18] There is a legitimate fear in other carriers following suit. The iPhone is being subsidized by $400, so it wouldn't be too ridiculous to imagine AT&T copycatting Verizon on this one.[2]

Guess what. Verizon! Verizon will make their money back anyway because they are making extra $$because the phone isn't being subsidized anymore, even though they are still charging the same for their services.[26]

I'm OUT! When this phone dies I'm moving on to either T-mobile or Sprint. $350 is crazy after I've been a customer for 5 years and paying $240 per month for my family. 4 blackberries would cost me $1400.00 to cancel if something happened in this financial mess that our country is in because of greedy companies.[20] Comes out to $200+$175+$75+$36=$486, yielding a profit for the end user of only $14, minus eBay/PayPal fees, so you're actually losing a few bucks flipping the phone. I know, I've done it with iPhones, BlackBerries, etc. It's hard to keep costs competitive when flipping.[26] Coverage is fine. (I'm on the west coast and a few times a year on the East Coast no coverage problems). As T-Mobile is the only other carrier in the U.S. that could technically offer the Iphone on their GSM network iphone is GSM only (T-moble already carries the Iphone in Germany) I would stay with T-mobile. Having said that, I really don't have any bad history with AT&T;so I would give them a chance if the costs for my family are close ($10-15 more no big deal).[35]

I'd bet the Droid cost more than the original $175 anyways, so Verizon would be losing money then. In other words, this is fair.[16] You guys missed it, as usual. This has NOTHING to do with handset costs. I guarantee you that they wouldn't have had the ETF at $175 for so long if they were losing tons of money.[22]

The current ETF is $175, and it decreases by $5 a month for each month of the contract'''s term that is completed.[36] The past two years have also''seen a rise in prepaid, a decline in contract prices and a slew of new hero devices increasing the attractiveness of one carrier over another. Unlocked devices still struggle to make it in the U.S., given their high price points, but all things told carriers have been steadily moving away from the contract.'' Considering that,''VZW'''s plan to double its ETFs is especially surprising.[37] Does this apply to only new activations only or existing too? I was able to get out of a contract when they raised texting prices. If they are changing ETF on existing plans, you can get out of your plan by saying they changes the terms of agreement and you can get out without paying anything.[26]

The idea is to make back the subsidies with long-term contracts and data plans. A higher ETF helps ensure that a customer will honor their contract, and if they decide to leave, the ETF will help the carrier make back its subsidy costs.[1] I applaud Verizon for making this move. I really think the Storm 2 started this. You can look on e-Bay and see people auctioning off Storm 2's for 400+ when you can get them from Verizon for 175 if your a regular customer signing a contract or a VIP customer for 125. The carrier is the one getting screwed here, and I think it is about time that they made this move.[22]

Re: I agree. If someone owns a phone for 1 month, Verizon doesn't make a hefty premium on them. To me it would seem to be the other way around - i.e. the ETF is necessary so that they don't lose that upcharge over the duration of the contract.[22] Update: Gerace contacted us to point out that all Verizon phones, including smart devices, are available without a contract at a full, unsubsidized, price.[36] I have no problem with the change, you are able to buy the phone at retail price and have no contract obligations if you'd like. I can see now AT&T coming out with an ad talking about this here. That should be great.[26]

If you don't think a particular phone is worth a certain amount, don't buy it. That's like me saying that I want a new Mercedes E Class, but only want to pay $30,000 for it.[22] Though the company did not specify what it meant by "advanced devices," Boy Genius Report's Andrew Munchbach speculated it was targeted at high-end smartphones like the recently announced DROID, which runs the open-source Android platform and was built by Motorola, and is scheduled to debut November 15. "Anyone considering abandoning plans to buy the DROID after hearing this news, or are you just going to get yours before November 15th?" Munchbach asked.[33]

The new processor actually is cheaper to make than the old one, not more expensive. This is like switching something that costs you $10 for something that costs you $5, but charging $20.[22] There's now a $350 ETF, which will decrease by $10 for every month that the phone is activated.[17] Customers signing up and purchasing smartphones before the 15th will be grandfathered into the old ETF policy, with the $350 ETF not applying to Corporate Liable lines of businesses with a Major Account Agreement and Enterprise Customer profile, Government and Telemetry account types.[34] When you figure out that it's no where near as sexy or as cool as the iPhone and you want to sell that shit on eBay enjoy your $350 ETF.[26] I was dead set on leaving AT&T / the iDevice to join the Droid's, but an ETF of $350? Now I'm not so sure.[26] According to the AT&T service terms, AT&T is still applying a $175 ETF if you cancel the service prematurely, reduced by $5 for each full month of service completed.[12]

I'm against ETF's generally, especially for things like cable contracts where you return the equipment. I can understand a reasonable processing fee, but nailing people for money because they're leaving your service because of whatever issues is just plain wrong.[22] The termination fee, applicable to one-year as well as two-year contracts, kicks in upon the discontinuation of the carrier's service before the completion the stipulated period.[32] You get a better deal by signing a contract but nowadays you can find really great deals from other carriers without having to sign anything. Who is your phone carrier? Have you ever terminated a contract early? Would this increase in early termination fees make you think twice about resigning a contract.[41] If there's one thing we can all agree we hate about cell phone contracts, it would have the be the Early Termination Fee.[44] Perhaps the most notorious example of electronics lock-in is the good-old cell phone contract early termination fee.[30]

Why the change in the early termination fee ? A scam involving flipping BlackBerries for cash, prizes and small puppies, apparently. Let's face it: If you're going to break a contract, chances are you're not going to care that much what it's gonna cost ya.[40] Wow, it's like none of these companies want my business. As for subsidies, they should just state that separately, instead of hiding it in a contract termination fee.[35]

Early Termination Fees are an insurance policy that wireless network operators have installed to make sure they don't lose their shirts on handset subsidies.[19]

Numerous state courts have also ruled that the fees are "unconscionable" under state law, and carriers have settled many other lawsuits to avoid a ruling against them, preferring to lobby Washington for weaker federal laws that would usurp the state consumer protections. Verizon Wireless recently announced that it would end its exclusivity agreement on its handsets, enabling smaller carriers to sell them six months after release.[33] All carriers, Verizon Wireless included, provide deep discounts on smartphones by subsidizing the cost of the handset.[1]

The move was largely considered symbolic, as it only applied to carriers with 500,000 customers or less -- and 90 percent of the market is controlled by the same four carriers, including AT&T, Sprint, T-Mobile, and Verizon Wireless itself.[33] Verizon Wireless, the nation's leading wireless company with the largest and most reliable 3G network, offers its customers a wide variety of sports apps, including MLB Mobile for baseball fans, NHL Clubhouse for hockey fans, NFL Pix & Tones for pro football devotees and ESPN MVP for the all-around sports fan.[45] Verizon Wireless operates the nation's most reliable and largest wireless voice and 3G data network, serving 89 million customers.[45]

At the time, it appeared ETF'''s days were numbered -- or, at the least, canceling early was less financially prohibitive.'' Today ETFs still rank among consumers??? biggest pet peeves with wireless, but they have been necessary for a lot of carriers to keep their customers from jumping ship every time a hot new device comes to market. [37] Some time back, the FCC was considering requiring wireless carriers to prorate the ETF based on how many months were used vs. remaining in the contract.[35]

Sometimes it makes financial sense to break a contract and pay damages. This includes construction contracts, cell phone contracts, anything. Doubling the ETF changes this calculus. (Note that if the ETF did not change this calculus, there would be no reason to raise the ETF in the first place).[40] If you cancel the contract you must return the phone or pay the balance up to the full retail cost of the phone.[22] Why would a service contract cost more than a phone (smartphone)? Please, no one justify it.[26] You are obligated to pay, but only the amount in the contract. If the company's costs were to sudden skyrocket, they can't make you pay more even if your contract with them is less than what it costs them to provide the service.[3]

My point is, the telco charges at retail what Apple charges them; as far as I know, there isn't a markup. If you cancel and pay an ETF that doesn't let them recoup the cost (as in, buy it and cancel immediately and pay the ETF), then they're losing money.[22] You can still cancel and resell in that instance, but Verizon will have made back most if not all of the phone's cost, and the reseller won't find the profit nearly as attractive.[25] You can still "turn and burn" the phone, but you're not going to be making much if any profit in the deal with a $375 ETF and thus have little incentive.[22]

Increasing a cell phone company's satellite fee from $50M to $500M per year is not a good thing for consumers.[26] If you cancel your service within 6-months you must also pay back the difference between the price you paid for the phone and the retail price. I believe most of the online cell phone stores have had a policy like this for many years and they seem to work.[22]

Almost double what it used to be. They will knock off $10 off that price for every month that you honor your contract but that still means that if you cancel your contract in the 23rd month of your 24 month contract you'll owe $120.[41] If I had bought the phone outright with no contract, I'd have paid $500 more.[22] Verizon is basically financing your phone for you, over the life of your contract. Of course they don't want you to kill the contract halfway though.[3] Verizon sure intends to cut a loophole for people looking to cancel their two-year Droid contract after the first month.[12] If apple gave free ipods and said you HAVE to buy 15 songs per month for 24months there would STILL be people complaining! I don't understand it. Actually, you couldn't use the Droid on Boost because they use two different technologies. Boost is iDEN and all of Verizon's phones are CDMA. I would go further into explanation, but most people who read this site are complete idiots.[26]

Just got a letter from Verizon saying my FIOS bill will soon go up by $10.00 per month. Might be a push to buy into one of their bundled services.[35] Just in case that some of you don't know, you can "cancel" your Verizon or any other those money hungry s any time you want if you do not get the service where is promissed. I did it.with other one's and Verizon just going to loose ALL 5 lines with me shortlly; they're service is only "Very Good" for the new generation that are to LAZY to look for better deals. they there. you just have to look for them.[30] I've been thrilled with AT&T;to be honest, easy to work with and I don't get a new charge every time I blink. It seems like Verizon is scared of losing customers.[35] I'm a Verizon customer and I have a contract that is set to expire next summer. This will definitely make me think twice before signing a new one.[41] The rumor has not been confirmed yet. Though, it is understandable if Verizon goes through with this. Unfortunately, it might affect innocent customers who need to terminate their contracts early for any other reason.[28]

The Basking Ridge, N.J. -based carrier said the penalty applies to customers in one- and two-year contracts with high-end devices such as smartphones.[13]

The other three major carriers followed eventually, making it the new industry standard practice. Now Verizon, the prorated ETF pioneer, is rumored to be raising its ETF on smartphones. It sounds harsh at first, but this is actually the right move for Verizon.[25] Good bye Verizon and your uncompetitive plan costs and your ridiculous ETFs.[26] I'm hoping since they are doubling the ETF, we will see a reduction in cost elsewhere - perhaps $15 a month data. or something, lol.[26] The value of nearly any given item is what people are willing to pay for it. If enough people are buying at $600, then no, it's not a "scam", and it shouldn't be $450 "tops" regardless of what it cost to manufacture it.[22]

The average subsidy of a wireless handset in 2008 was $14.33, so a $175 fee is already more than 10 times the average subsidy. [32] At $175 there were certainly some handsets where profits could be made by early cancellation, albeit often too small to be worth the hassle, particularly given that each time you do it you chalk up another credit application on your record).[15]

It is more about protecting against fraudsters looking to make a quick buck by flipping the phone and selling at a profit and not REAL customers who will stay or go based on service quality. [22] I'm suprised they don't do what [[ Toyota/Lexus is doing with the LFA, only "selling" it at the end of the lease. It's better for the phone companies to charge for the cell plan, an extra fee for data, more for unlimited texting, a monthly lease, then in the end make them pay even more for the phone.[22] » I agree. VZ gets their initial fees, and they get an ETF. I don't see they really "hurting" in that situation, subsidized phone or not. -- "So, Lone Starr, now you see that evil will always triumph because good is dumb."[22] Kelsey says he'''s unimpressed. '''ETFs are already too high,''' he says. '''This ($350 fee) is absolutely ridiculous."[36]

Regionally, the company has invested more than $2.5 billion into its New England network over the past nine years, including more than $105 million during the first six months of 2009.[43] When I purchased a new house, it already came with an alarm system in place. I've been using this system for over 5 years now, because the company did not make me sign a contract.[35] Maybe not charging ridiculous prices for devices without a contract''' even 2 years after the device was originally released.[27] I would still like the ability to cancel my contract, within a reasonable price range. It's simple to say "Dont cancel a contract" and then give an asinine analogy of speeding tickets.[26] If you can buy a "compatible" handset on ebay, why sign a contract? You can start and stop service when you need/feel like it, or use it with a prepay and only use it when you need it.[22] If other wireless operators follow suite, it looks like the contract may rise again.[37]

There is an ETF in the first place. If someone is going to turn and burn them they pay the ETF, everyone is satisfied. Sure- just now the ETF is higher, and is agreed to by both parties signing the contract.[22] It doesn't matter what they pay wholesale for the phone. What matters is their expected revenue over the contract period.[22] You owe 200 more. It's even more ironclad, you get the phone back, refurb and resell. Who says you must return the phone? Is this in the contract? Obviously, people are doing it so it must not be.[22]

Actually joarobdel5, Boost has a CDMA network as well, but you wouldn't know that because you're an idiot. How do you think people get their Blackberrys on there? Did you think there's a mysterious iDEN Blackberry for sale somewhere? Maybe next time you should bring up a legitimate point, like the phone being locked or something.[26] Wrong, why target the "advanced phones"? Because those are the revenue generating phones, like iPhone. They do NOT want to loose their top paying customers to AT&T;.[35] The no-commit iPhone option for existing AT&T customers is priced at $599/$699 for the 16GB/32GB iPhone 3GS, respectively.[12]

The only positive about Verizon is the network. I get excellent service where I live with AT&T and the iPhone (although I do feel for those in NY).[26] Are we forgetting that a phone is bought 1st) to make calls, and 2nd) to go online with? Why do I care if Verizon has more 3G coverage over a farm in Wisconsin that AT&T doesn't cover? If I happen to drive next to that farm ONCE in my lifetime and I don't have 3G access, I'm sure I won't spontaneously combust.[26]

The verizon announcement does not limit the cancellation to only those who get 2 phones / lines. If they are trying to protect themselves from the bogo scam then they should restrict it to that.[35]

BGR pointed out that a lot of consumers try to '''work the system''' by buying new BlackBerrys on sale, opening a second line to get a new''advanced phone,''paying the cancellation fee then selling the device on eBay for twice as much. [37] Hopefully, Verizon will collect the new fee on a selective basis to handle abuse situations. David Coursey tweets as @techinciter and can be contacted via his Web site.[11] Enjoy a shiny new DROID and experience Verizon's excellent 3G coverage and the ability to make and receive calls.[26] Looks like Verizon is tming this PERFECTLY for the launch of the Droid. the big V really knows how to weild its attitude that its the carrier everybody wants to be on.[40] A statement like that implies that Verizon is taking unfair and/or unethical advantage of their customers. The fact that they are customers and not indentured servants pretty much precludes that. A customer enters into a voluntary relationship with a business because, first and foremost, they want what that company is offering.[3] I started out with Sprint, which had great customer service and HORRIBLE cellular service. I kept getting dropped calls, which they gladly credited me for. Obviously this gets annoying. Verizon, on the other hand, you can't get a right answer out of any of their customer service reps. This idiot at the Verizon store signed up my FiOS service in my father's name, who I specifically told him, he was deceased and it should've been put in my mother's name. That was the beginning of my problems w/ Verizon.[3]

If a customer completes five months of service, the penalty would be reduced to $300, for example.[36] This. is. No. this is. They just lost a potential customer in me. $200 is painful for T Mobile. $350? You can go to hell. No, this is Patrick. This is a real shame.[26]

Know why I don't see a problem? Because the retail price of the phone is $500 more than I paid.[22] MS. many of the good unlocked phones in Europe are serval hundred dollars. It is not unheard of paying $700 and up for these devices. get real.there is no free lunch.[3] How is paying an activation fee, paying for a phone, then paying an early termination fee being fraudulent? Perhaps it's gaming the system a little, but those who are clever enough to do so should not be punished for it.[22] This is a good chance for Sprint to pull out an ad as well and claim the lowest prices and termination fees of any carrier, if AT&T and Sprint are smart, they take full advantage of this.[26] Wireless termination fees are not only a bane for customers, but a frequent target of criticism from Congress and policy advocates.[33]

ETF charges have been a hot topic with wireless carriers, consumers, and the government. [3] I don't turn and burn, but an ETF in theory should be going down. They can charge more for the phone if need be. -- "So, Lone Starr, now you see that evil will always triumph because good is dumb."[22] Kind of makes you wonder what AT & T are gonna charge once iPhone is available anywhere else. All these phone companies tend to have similar charges it seems.[35]

Well, to be fair, everybody charges an additional $15 for exchange access, and they do it on all smartphones capable of using Exchange.[26]

Just because someone is buying an UNLOCKED, Typically Grey Market device at $700 doesnt mean the market value is placed at that price when tied to a carrier.[18] That is the price VZ is getting them for? Doubtful. I don't know what they're paying for them, but it's no doubt less than $600. It's not at all hard to believe that they might be paying more than $375 though.[22]

The higher end watches cost anywhere from 10 to 25 times the price of the Citizen. Do they cost that much more to manufacture? Doubt it. They can get the higher prices because of a perceived value. It's the same with cell phones.[22] In addition to the cost of parts to make the phone include labor, R&D, distribution, shipping, and advertisement. For the ones that say it doesn't cost that much you are not at all knowledgeable about this subject. They must pay for all this and may even pay more for the parts because they don't just make all the parts for the phone themselves it's a lot of companies involved with making that phone.[22] Still if you cancel and want to keep the phone, pony up the full retail cost.[22]

Because the subsidy Verizon pays is higher on smartphones. They plan to make their money back on the data plan, but if you cancel after a few months Verizon isn't able to do that. [26] With a penalty that steep, I can't imagine any way to profit off of flipping Verizon smartphones.[24] I'm on Sprint now and was thinking of jumping ship and going to Verizon but that may give me pause to reconsider. I am not dissatisfied with Sprint in any way, I just felt the service was more reliable with Verizon and I have had both twice each now to base that comparison on.[3]

Andir, your math is flawed. you still have to pay activation ($36) and one month service, lets call it $75 for data/voice/text. [26] The bitch here is that most posters don't want to be tied to a contract. If they pay full price up front they are free to leave whenever they want.[22] The contract means that the purchaser is obligated for, usually, 2 years of service.[3] I have had good luck with T-mobile- though decision time comes up in August as my two year contract expires.[35]

Two or three times per year, for a month or longer, Verizon runs buy one get one free offers (BOGO).[25]

The ETF has long been the bane of anyone who cannot stick to a single phone or carrier for any extended period of time.[44] This could cause a surge in Motorola Droid returns, as people rush to try out the device before the ETF hike.[34] Off-topic and posts from suspected astroturfers will be removed. "Verizon's definition of "advanced device" is whatever iPhone-lookalike-not-workalike they're dangling this month to dupe the ignorant.[35] To stem the tide of customers leaving for greener pastures, i.e., iPhone, Verizon will also be implementing the following "customer retention" techniques.[35] To preview and request broadcast-quality video footage and high-resolution stills of Verizon Wireless operations, log on to the Verizon Wireless Multimedia Library at www.verizonwireless.com/multimedia.[45]

PhoneNews.com Welcome to PhoneNews.com, providing complete coverage of the wireless industry, cell phone news, and future 4G technologies.[34] "We've invested billions of dollars into New England believing that even the most sophisticated cell phone is only as good as the network it runs on."[43]

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Verizon to raise early termination fees for 'advanced devices'

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