Report says Nextel waived early termination fees for the government

Want to get around those costly, annoying fees the telcos hit you with if you break your cellphone contract early? Get a job with the US government. According to internal emails from Nextel which were uncovered by the Associated Press, the company debated whether it could charge the folks in power early termination fees (ETFs), with then-vice president Scott Wiener arguing that "the government will never, never accept such penalty amounts." Nextel ultimately decided to forgo the charges for Uncle Sam, while continuing to bilk its average users without as much as a batted eyelash. The FCC is currently taking a look at the fee situation -- let's see if they can give end users a fairer shake than the providers.

[Thanks, Travis]

[Sebastian @ Jun 13th 2008 3:23PM]

These penalties are pure rip-off: The other day I was in a T-Mobile store. I asked for a contract without(!) a phone and they said it will still be a 200 USD charge if I walk away from the contract before 2 years are over. No half year,or one year contracts available...

Get this: Without asking for a subsidized phone I have to commit 2 years otherwise I have to pay a penalty. What a bunch of [insert swear word here].

[sr1329 @ Jun 13th 2008 3:26PM]

I think AT&T can put you on a plan with no contract if you don't take a phone from them. I also thought T-mobile could, but check Howardforums if you want to be sure. They do it, but there's always a technique involved in getting those rarer offerings from these greedy pigs.

[Striker @ Jun 13th 2008 3:27PM]

You wanted a contract WITHOUT a phone?

[paul34 @ Jun 13th 2008 3:38PM]

Why would you even do that, though? It makes FAR more sense to just get a contract + phone from Amazon, collect a nice rebate check, and then sell the phone on eBay and collect even more cash. Done.

[Kyle Burghart @ Jun 13th 2008 3:41PM]

You probably talked to some idiot who does not know the correct pricing terms. I know you can get a plan w/o a contract and phone from ATT. So I am sure T-Mo does the same.

[Chris @ Jun 13th 2008 4:00PM]

sadly this true, at least in store. a few months ago I called and got a 1yr contract, but the rep said even that option for them was going away "soon". the only no contract option is pay-as-you-go, and AFIK there is no such family plan, and I don't want to pay 4 seperate phone bills.

[Bryan Thornsberry @ Jun 13th 2008 4:09PM]

Well yeah. If you come to my store with your own phone and want a 2 year contract, you know what your getting into... a contract.

But if you had your own phone, or didnt want a phone, the employee should have steered you toward a flex pay no contract, where as you still get a normal plan, you just pre pay each month for it, thus putting you under no obligation. The employee probably just wanted a sale out of you.

ETF's suck guys yeah, but you understand them when you get that sweet new phone at a hefty discount. Whats the point of a binding contract when there isnt any penalty for leaving? People would just get all these free devices or cheap phones, then cancel a month later and get the latest phone at a different carrier. The system just wouldnt work. And none of us want to pay full price for a phone up front. So its one of those cant have your cake and eat it too cases. Deal with it, ya know?

[OneLove @ Jun 13th 2008 4:11PM]

So if the gub-mint thinks that the charges are outrageous and refuse to pay why don't they pass legislation to help the common joe do the same?

[0megapart!cle @ Jun 13th 2008 4:14PM]

The problem is that subsidized prices inflate the price of phones unbelievably. The iPhone 3G is just the latest example. How much is Apple getting per phone? At least $400, maybe more. The price has not gone down one cent in a year, whereas every other consumer electronics category goes down in price and up in features every year (even iPods).

The fact is, that "sweet" phone that you are supposedly getting for a relatively cheap price with a contract would have been even cheaper, with no subsidy, if market forces had lowered the price of the phone like in every other consumer electronic category.

[Sebastian @ Jun 13th 2008 5:57PM]

Yea - know about flex-pay (costs about $100 in activation fees until you have all the crap you need together).

Big issue with flex-pay: it is almost like a contract but not really. Try to ask for international roaming, internet etc. and then it starts to suck - not that it is impossible altogether but it is a pain to get. Big gaps in the online system of T-Mobile, support being cranky ("only flex-pay") etc.

Again - I don't understand these policies: I'm not even asking for a rebate on the monthly subscription to compensate for my otherwise heavily subsidized phone! So the carriers should be GLAD to get people that just want a contract and not a phone...

In Europe there are a lot of carriers that offer really good and flexible contracts without phones (no pay-as-you-go rip-off). Why not here in the US?

[Jack Storm @ Jun 13th 2008 9:08PM]

Wait youre complaining because you have to pay a fee if you break a contract, that you want to enter, early?

CONTRACT

[Mage @ Jun 13th 2008 3:24PM]

This isn't as unusual a situation as the article seems to suggest. While individual retail customers are routinely dinged by an ETF, carriers (not just Nextel) will waive these fees for their corporate customers. It is part of the overall contract that the corporation makes with the carrier. My company for example, doesn't get charged ETFs by some of our contracted carriers.

[John @ Jun 13th 2008 4:34PM]

Especially situations involving the government. Often, companies LOVE having the government as a client because the company can inflate prices based on special needs of the government. Usually, the government requires a slightly "customized" version of a product/service, which gives the company the legal ability to charge a lot more for said product/service. A great example would be if the company wanted on demand service without the inconvenience of termination fees (as mentioned in this article). "Great!" says Nextel, and they inflate their prices accordingly.

This is unique to the government as opposed to normal corporate plans because the government is essentially an endless money pile for companies, so companies can overcharge for their services and the government will happily oblige, but guess who's REALLY paying for the lack of termination fees in the end?

[Rob @ Jun 13th 2008 3:24PM]

This is another reminder that the ones in power don't give one flying fuck about the ones who put them there and pay their salaries. No early termination fee, free health care, sweet pension plans. Wow... It sure makes you glad to be busting your ass and dealing with the issues normal people deal with in their lives.

[George @ Jun 13th 2008 4:03PM]

Wow, if you actually knew anything about the government, you would know that most federal employees don't get free health care. It costs.

Second, some folks enter the government and then they leave or get fired or whatever. Those blackberries and phones still belong to the government or office. So what happens when that happens?

Third, if an officeholder does not get reelected, then what happens to all those blackberries and phones? They have to be shut off. So it wouldn't make sense to have an ETF.

And the comment doesn't even make sense. How would not paying an ETF be another reminder that "the ones in power don't give one flying fuck about the ones who put them there"?

[wanax @ Jun 13th 2008 4:20PM]

Rob,

As George said, you really don't know much about the government. I'd also like to point out that many of those who do get phones assigned to them are usually higher ups (manager/directors), not your average government worker. Here in DC especially, these guys are appointed by the presidents office. Guess what happens when Obama/McCain get into office? That's right, new appointees. It would make no sense for the governemnt to shut off all those phones and have to pay a fee.

[tamaracks @ Jun 13th 2008 5:16PM]

Working for the government doesn't mean that your personal phone will have no ETF. It means phones that the government pays for have no ETF. Which is a work phone, and you're not supposed to use it for personal calls, along with all the other stuff mentioned above.

Oh yeah, no free healthcare either.

[TRAFFICBLOWS @ Jun 13th 2008 5:38PM]

And as for FERS or military pensions... I guess they're sweet if you don't mind dealing with so much BS for so many years and then decide to get a side job after you retire to keep up your standard of living- they don't make you rich!

[sr1329 @ Jun 13th 2008 3:25PM]

BS. The government should read their contract just as much as we are expected to. What are the chances Scott Weiner will look at me and say "well, he looks like he won't accept the fee let's waive it"?

[Minilap @ Jun 13th 2008 3:26PM]

Be happy with what got, up here in Canada we pay $400 for ETF, and they make you sign a 3 years contract.

[Zorque @ Jun 13th 2008 3:27PM]

People still use Nextel?

[Shawn @ Jun 13th 2008 3:30PM]

I came for the "its" vs "it's" argument and left disappointed.

[pbase @ Jun 13th 2008 3:33PM]

pbase will never, never accept such penalty amounts.

[dan @ Jun 13th 2008 3:33PM]

if the government paid the fees wouldn't we still pay for it with our taxes?

[JohnSearle @ Jun 13th 2008 3:36PM]

About six months ago I was working for Nextel's government employees branch, and I can tell you right now that they DID have ETFs.

Government agencies themselves don't have ETFs, but if you didn't get your phone through your workplace, then you're bound to an ETF. This is also the same with quite a few corporations.

Personal accounts, regardless of employer, generally get ETFs; corporate or government agencies do not.

- John

[shaniac @ Jun 13th 2008 3:36PM]

I don't think this is right, because Government subscribers don't have to sign contracts. I know Nextel has many a shady dealing with the Government (emergency spectrum bleed and all). But I guess the issue could be that they were charged even without a contract.

But lets face it, as long as consumers want "free" phones and are not willing to pay for good ones then contracts, subsidies and early termination fees will be the norm. On top of that the schemes that the companies run with "free" phones not being in stock (T-Mobile) and the fact that the backend systems all run by Amdocs can't calculate a partial rebate the entire markets gets inflated in very strange ways.

[The 3rd Hot Dog @ Jun 13th 2008 3:51PM]

Is that Vorhees in the background?

[Josh Havener @ Jun 13th 2008 4:45PM]

He's been in the backgrounds of all the pictures today... well most of them...

is there something you're hiding Engadget?

[Jason @ Jun 13th 2008 5:46PM]

Look at today's date.

[Jamar @ Jun 13th 2008 11:27PM]

Saturday, June 14, 2008?

[Darrin DeTorres @ Jun 13th 2008 3:54PM]

I believe the ETF's shouldn't be a standard charge i believe they should charge you the reamining of what you would have paid for full retail. So you save $150 on a phone and cancel your contract a few months later than you pay back that $150. I think that would be fair. I don't however understand why people cry about the ETF's anyway read your contracts people.

[kal326 @ Jun 13th 2008 3:57PM]

Granted they aren't going to go away, but at least the FCC is looking into making it mandatory to prorate the fee. Since most times you are usually over half way through your contract before you are looking to jump else where. Even more so if you almost at the end of your contract and you want to change. Why should you have to pay all of the cancellation fee when you have 2 months left on your contract?

But knowing politics and lobbying groups we will probably end up with a prorated 400 EFT, mandatory 3 year contracts, and higher monthly fees.

[pwharff @ Jun 13th 2008 3:58PM]

Love the hidden Jason pic's, searching everywhere on new posts to find them. Makes me laugh everytime. More more more! Happy Friday the 13th!

[mmendoza27 @ Jun 13th 2008 4:05PM]

Me too! It's like playing "Where's Waldo?" and I think it's hilarious seeing Voorhees on a tech blog.

[Kain @ Jun 13th 2008 4:06PM]

I work for a government agency and we have never had to pay any efts. :D

[Matthew @ Jun 13th 2008 4:37PM]

I work for a public university and here they use verizon wireless. They also allow them to cancel at any time.

[h8rain @ Jun 13th 2008 4:38PM]

Personally I would rather pay a higher up front cost for the phone, and have no contract. However, most of the time you still have to have a contract to the "advertised" plan at the "advertised" price.

The original iPhone is like this. You originally did not get a discount on the phone, however you still had to have a 2 yr agreement.

I know there are a couple "prepay" monthly plans, but I think they cost more.

[ObeytheFist @ Jun 13th 2008 4:41PM]

I'm currently trying to get out of my Clearwire contract and fighting a $180 early termination fee on a 2 year contract that has 6 months remaining. The only power they hold over me is their ability to put an uncontestable blackmark on my credit report.

Since the government doesn't have a credit report, why should they give in to these dickheads?

[7on @ Jun 13th 2008 6:57PM]

no wonder there will never be laws against ETF... the government never has to pay them.

[baldu @ Jun 13th 2008 7:24PM]

The US government is a huge customer that Nextel wants to please. That's it. I'm sure GM gets pretty good deals with their provider, too.

Pass a law banning ETFs? WTF? If you don't like it, nobody is forcing you to sign the contract. Pay full price for the phone or agree to their terms to get the discount.

A lot of people here seem to be of the mindset that the evil TelCos are trying to deprive them of their right to own cell phones or something. This is really sickening.

[meh @ Jun 14th 2008 3:58AM]

Sprint does this for military folks getting stationed overseas, whats the big deal.

[Jimmy @ Jun 14th 2008 9:49AM]

AHHHH! Godspeed FCC! I want an iPhone, you Verizon dolts!

[hnkelley @ Jun 14th 2008 7:53PM]

This is not only not news, it isn't even a controversy. It must be a slow news day for whoever started this rolling.

Each contract is individually negotiated. As a single consumer, you don't have much bargaining power. Corporations have more. And the government has even more than that. So, yes, it gets special deals us 'normal' people don't get because it can buy larger over all contracts. Sounds fair to me. Besides, if Nextel (and ALL the others) hadn't been doing this, you and I would be paying those fees. Where do you think that money comes from? The U.S. federal government also stipulates in most of its contracts that the provider (whoever they're buying whatever from) must give it the lowest price they offer. Again, why not? It saves me tax dollars. But it really is mostly about the purchasing power and, by extension, the negotiating power.

[Patricia Pangelinan @ Aug 3rd 2008 2:05PM]

It should be like a insurance contract, they cant cancel on you but you can cancel any time, even after they paid out for a claim. Last time I checked the insurance industry is still making a mass of money.

The cell phone companies need to win our business, no more of this bull of it is a pick of the crap when choosing a carrier for your wireless service.

oh, and they still will make money no matter what, the just wont be able to rape us.