updated 04:10 pm EST, Tue November 10, 2009
Law forces VZ, others to keep ETF in check
Minnesota Democrat Senator Amy Klobuchar said on Monday that she will introduce a measure to prevent US cellular carriers from raising their early termination fees (ETFs) quickly. The move is a direct reaction to Verizon's decision to double ETF rates for "advanced devices" like the Droid to deter customers from exiting their service early. Klobuchar claims the rate hike has "little to no relation" to the cost of the phone and that it punishes those who depend on cellphones and have to quit for honest reasons, such as moving into regions that don't have coverage.
The Senator has written to both Verizon Wireless chief Lowell McAdam and FCC chairman Julius Genachowski to signal her intent. In the FCC letter, Klobuchar rejectes anti-regulation arguments by Verizon and other CTIA members, claming instead that the ETF jump is proof carriers will spike their rates when no one is monitoring their practices.
"Verizon Wireless' decision shows us once again that the wireless industry cannot police itself and will not, on its own, make its practices more competitive and consumer-friendly," she writes.
Verizon has responded that the ETF is prorated, as the fee drops $10 for each month of service, and also points to the contract-free price as an option. However, choosing this option raises the price of a Droid from $200 to $560, or more than it costs to simply abide by the contract and cancel later. Most carriers use the ETF as a means of guaranteeing the profit they would make from each subscriber that is lost when a customer quits before a certain point in time.
It's not clear when the bill will reach committee, but it comes as the FCC is about to debate wireless net neutrality that, if enacted, would prevent all US carriers from blocking legal apps and services.