FCC takes Google to task for Nexus One cancel fee
updated 03:25 pm EST, Tue January 26, 2010
FCC investigates Google, ATT, Verizon, others
The FCC today sent an inquiry (PDF) to Google and the major US carriers to explain their early termination fees (ETFs). Adding Google to an already ongoing debate, the US agency wants the search firm to explain its mystery Equipment Recovery Fee that swells the cost of canceling Nexus One service early. While it praises Google for offering a new business model, the FCC questions Google's decision to charge an ETF above and beyond T-Mobile's when no other carrier or phone involves that fee.
Notices sent to AT&T, Sprint, T-Mobile and Verizon take a different approach and chiefly ask the cellular providers to explain whether their ETFs are consistent across all devices or plans, whether customers can buy the phone at full price to avoid an ETF, and how much customers are made aware of the fees. The four majors were also challenged on how much they prorate the fees and whether plan fees change depending on the presence of ETFs.
Google and all of the other parties involved have until February 23rd to respond to the questioning.
The notices signal an escalation of the FCC's concerns over cancellation fees, which were prompted mostly by Verizon's decision to double the ETF shortly after the launch of the Motorola Droid. Verizon has already tried to defend itself but was found to have provided worrying answers as FCC Commissioner Mignon Clyburn was told that the fees not only covered device costs but marketing and other expenses entirely unrelated to quitting service before the end of a contract.
Recipients of the letters have yet to comment.
Fresh-Faced Recruit
Joined: Jan 2010
Loan is a loan....
...and thus the transaction should be treated as such!
If the FCC really wanted to clean this up, all they need to do is work with the governing body which oversees the banking industry and define this as a consumer loan. The entire process of purchasing a cell phone and cell phone service is exactly like the process of acquiring a loan. You fill out an application, the cell company does a credit check and approves you based on some risk calculation, you sign a 'DETAILED' contract, you are provided some asset/physical device, you make incremental payments as defined by the terms of your contract and if you do not comply with the terms of the contract, you are required to repay an amount which was 'loaned' to you. Not to mention the adverse information which could be reported to the credit bureaus.
If a carrier wants to provide a loan service to individuals to lower the barrier of entry for new services because unsubsidized phone prices are too high, it should do so thru a licensed institution. I should be able to buy any carrier compatible cell phone from any hardware vendor and use it with the carrier that best meets my needs for cell service. That includes rate plan costs, geographic coverage, billing accuracy and customer service.
Get ride of long term (longer than 6 months) exclusive hardware deals, 'locked' phones, and force the carriers out of the illegal loan business, then the cell phone experience here in the US will be what it should be.