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FCC finds Verizon responses "troubling"

updated 07:05 pm EST, Wed December 23, 2009

FCC doesn't believe Verizon

The FCC in a response (PDF) today rebuffed Verizon's claims that its ETF rate hikes are necessary. Commissioner Mignon Clyburn in a public letter described Verizon's justifications for doubling early termination fees as "unsatisfying" and sometimes "troubling." While the carrier primarily explained them as necessary for covering costs when buyers of the Droid and other phones leave their contract, Clyburn says Verizon has expanded the reasoning well beyond just the actual hardware.

"No longer is the claim that ETFs are tied solely to the true cost of the wireless device," she says in the notice. "Rather, they are now also used foot the bill for 'advertising costs, commissions for sales personnel, and store costs.' Consumers already pay high monthly fees for voice and data designed to cover the costs of doing business. So when they are assessed excessive penalties, especially when they are near the end of their contract term, it is hard for me to believe that the public interest is being well served."

She also directly challenges Verizon's denial that it charges $2 "phantom fees" when customers launch the web browser, observing that numerous customer complaints and several media reports directly contradict its statements. Many of the complaints have noted that the charges not only appear when Verizon's own portal page loads but that they occur even when data has been blocked on the account or phones have been switched off.

Clyburn plans to debate the issue with other FCC commissioners in 2010 and is expected to hold a more formal inquiry.

Both the ETF rate and phantom fee disputes are likely to have significant repercussions for the entire US cellular industry as they may affect pricing for all carriers. Although it remains true that carriers risk losing money with a customer if they terminate their service before the device subsidy has been paid off through service costs, critics have accused AT&T, Verizon, and other major carriers of keeping the rates high for as long as possible to "trap" customers in their contracts even if they encounter poor service or are well into their agreements. Verizon's new $350 fee, though prorated, would charge a customer $120 to leave even if they're just a month away from ending a two-year contract. [via BBR]



By Electronista Staff
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  1. LenE

    Fresh-Faced Recruit

    Joined: May 2004

    +1

    VZW is slimier than I thought

    "Rather, they are now also used foot the bill for 'advertising costs, commissions for sales personnel, and store costs..."

    My twin sister works for Verizon Wireless, and she told me that the company revokes commissions from their sales staff, when a customer cancels a contract early. So they are telling the FCC that the sales commissions are covered by the ETF, but they make their sales people repay the company their commission when a customer decides to bolt. It didn't make sense to me that the sales people should be penalized, if some other aspect of the company's performance pushed a customer to cancel.

    This may not be the current practice, but it was when I had made my mind up to leave Verizon at the end of my contract with them. I'm on AT&T now, which sucks differently, but about the same amount as Verizon Wireless (in my area), but I would be loathe to give up my iPhone 3GS now.

    -- Len

  1. Wingsy

    Fresh-Faced Recruit

    Joined: Apr 2005

    +1

    "phantom fees" is right

    "phantom fees" is a very good name for what Verizon was charging me when I was with them. For at least the first 6 months, EVERY month I would have to call them to question some weird charge that appeared on my bill. Every time, they would say it was in error and removed it. I don't believe any company could make so many errors, all in their favor, by accident. It was the main reason I left them. My second reason was due to many many dropped calls even though I live only 1/2 mile from their nearest tower. They let me out of my contract with no termination fee because of the high rate of dropped calls I was experiencing. With ATT I get an occasional dropped call now & then but it is nowhere near the rate I had with Verizon. (Come to think of it, I haven't had a dropped call in a month or two now. Maybe they tightened a loose s**** somewhere.)

  1. b9robot

    Fresh-Faced Recruit

    Joined: Feb 2009

    +1

    In a word, RIPOFF!

    In a word RIPOFF! All the cell companies have been soaking customers since there inception with phantom fees and ridiculous claims they have to penalize you when you leave your contract early even when its only a month or two to go. They say they lose money. How?
    Verizon's explanation was piss poor to ridiculous in my opinion.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -3

    in a word...

    Gee, remember in the good ol' days, where, if you signed a contract, you were actually expected to abide by the terms? Now it's "Sure, I signed a contract, but I should be able to get out of it!"

    Maybe if Americans weren't just a bunch of whiners who insist that they should get new phones for nearly no cost, sign up for long-term contracts without thought to consequences, or any of the 80000 things they do, the providers would have long ago had to change their policies, phones would be bought without service, and service would be bought based on what people want.

    But what should you expect from a land where people rack up 10's of thousands of dollars in debt, then complain when the lender dares consider them a credit risk and raise their credit rates. Or buy a house with an adjustable rate mortgage, then shocked to find the rates went up and they can't afford it anymore.

  1. urapns2

    Fresh-Faced Recruit

    Joined: Sep 2007

    0

    Gouging

    My niece left Verizon this past December and was 31 months into a 24 month contract. She was hit with a $60 ETF. Apparently they deduct $5/month for 24 months but they start at $180. I told her to save her bills, she'll be glad to forward them to the FCC so they can see that Verizon continue to charge phantom fees long after they told the FCC that they had stopped.

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