Google imposes $350 early termination fee for subsidized Nexus One in addition to carrier's own ETF
By Ross Miller 
posted January 12th 2010 7:21AM
posted January 12th 2010 7:21AM
Here's another reason to consider going the unlocked route with the Nexus One, in addition to having the AT&T (non-3G) and international GSM option. As a number of people have noticed, Google's got its own Early Termination Fee (ETF) equivalent, here called the Equipment Recovery Fee, in the terms of sale, to the tune of $350 if you cancel within the first 120 days. Sound familiar? It's because we saw it in a leak just before the new year. Here's the kicker, though: this is in addition to any fees imposed by the carrier -- not necessarily a problem on its own, but we just glanced at T-Mobile's terms of sale, and sure enough, there's an associated ETF up to $200. If we're reading this right, Nexus One owners who decide to end their service after the 14-day trial period is over but before four months have passed will be hit with upwards of $550 in fees -- more than if you bought the phone outright from the start, especially when you factor in the upfront $180. There hasn't been enough time for someone to tempt fate, but who knows -- come January 20th when early adopters' trial period ends, there might be some interesting stories abound.
Evil google.. evil
Why are they getting the money?
Isn't the phone subsidized by the network if it's on contract?
Considering the marginal level of subsidy they offer compared to other phones, $350 seems harsh
@(Unverified)
Lol, it's seeing plans like this with cell carriers and makers, that make me LOVE my pay-as-you-go $30 Motorola Motofone F3. ;)
@(Unverified) It doesn't sound like they're all that confident people will love it enough to keep it past its "buzz" period. And based on all the complaints about poor customer service, they might be right.
p.s. Not a Google/Android hater...just trying to be honest.
@(Unverified)
They are getting the money, because they are selling the phone. T-Mobile isn't actually subsidizing anything in this case, though far be it from them to correct their mistake
On a side note, imagine how much Verizon is going to want to dick you over for with their new ETF pricing
Unlocked phone = Freedom + way cheaper (when you do the math)
Plus you get the ability to sell it and buy new one/change network without any trouble instead of "I'm stuck with this phone till my contract expire after 14months lol....." this is slavery :P
It's really mind puzzling because worldwide everyone prefer unlocked phones expect America where most unlocked phones end up being a failure (sales wise)
@EGOvoruhk
I wonder how T-Mobile plan to justify their ETF to the FCC since the only way they have gotten away with it in the past is recovering losses from hardware sales, and since google is the one doing that in this case.
..... 0_0
@EGOvoruhk
An extra $160 probably. And the plans are already too expensive. Solution: Just get it unlocked then you can bounce if you need to.
@GoogleCEO
I agree that the unlocked option is the way to go, but it only makes sense if you get a service plan that takes advantage of your phone being yours; and the means only T-mobile right now, which is horrible in my area of Northeast GA. If Verizon offers a t-mob type of unlocked plan when they bring the N1 aboard, that will be something. and shocking.
@(Unverified) - Again, NOT including 850/1900mhz 3G HSPA frequency was a BIG MISTAKE! There are plenty of at&t non iPhone users that would have gladly taken a crack at an unsubsidized N1 the same way that iPhone's are being used on t-mobile US right now. Talk about gimping the "take rate" out of the gate. Silly Google, just plain silly!!
@(Unverified)
Google is probably doing this because they are actually selling the phone themselves through their own website, and haven't figured out how to do the account on it, yet. I imagine no one will actually be stuck with this double fee, Google and TMobile have just neglected to actually work it out.
@Frankenstein Black
Only Edge on AT&T is why I didn't purchase it. Dealing 2 1/2 years with AT&T iPhone is why I don't want to have to go back to square one with the nexus one. I got wimax now and maybe in a few month have a mobile hot spot and just leave it all behind for VOIP.
@(Unverified) hey that is my avatar :O are you a Droid lover too?
@Spunkie
If google charges ETF fee, I guess t-mobile will not double charge ETF on this phone.
@yejun
I imagine Google might charge the ETF in addition. I imagine what happened here is that Google is giving the subsidy of the phone not T-Mobile. But then T-Mobile pays Google a $350 bounty for each customer who signs up with T-Mobile and stays with them for 121 days.
The real take away here isn't that T-Mobile or Google is evil. Only that we are stupid.
529 + 24 months of $59.99 500 minutes+data+texts even more plus plan that does not include a subsidized phone = $1968.76
179 + 24 months of $79.99 500 minutes+data+texts even more plan that INCLUDES a subsidized phone = $2098.76
So the bottom line is that the subsidized phone is a rip-off. It’s pure marketing. People think they are getting a free phone when anybody who knows anything about business and economics knows that there’s no such thing. Google knows it too. I imagine they started this google.com/phone thing only intending to sell unlocked full price phones. But some business person stepped in and said “woah! we have to offer the discounted phones with contracts because Americans are too stupid to realize the benefits of price up front phones and are used to being tricked into thinking what a great deal a free phone is.” So they had to tack on the plans, and didn’t negotiate with the carriers for the carriers to forward the ETF onto them, so they had no choice but to do this.
@(Unverified) Interesting in light of the "google to buy t-mobile" rumors...
@(Unverified) "If we're reading this right, Nexus One owners who decide to end their service after the 14-day trial period is over but before four months have passed will be hit with upwards of $550" Not only that, once you go in for the locked plan with Tmo then you are obligated to have their 500minute plan. Any plans lower than that is not permitted by Tmo. So I guess BIG G is really suggesting that the unlocked plan is the best deal huh? Details: http://bit.ly/nexus-one-disadvantages-compiled-details
@(Unverified)
What's the big deal? it's 120 days, is anybody here going to be canceling away from the nexus one in 4 months?? if you are.. then i think you've got bigger issues to be worrying about
@(Unverified) This site has become nothing but fanboy flamebait for page hits. Clearly if there is anyone at fault here its T-mobile who is putting a unwarranted $200 fee on their contract. The $350 ETF is 100% justified since it is Google who are the ones subsidizing this phone. But you already knew that and are shamelessly misrepresenting the facts to get page hits. Disgusting.
@esper256
Yeah, but you're only saving $130 over two years. It's not that big of a benefit. It appears that the main benefit is that you get to skip out on the carrier whenever you want.
Now if T-Mobile had a plan where you could bring your own phone and get charged a flat rate of $40/ month for voice, text and unlimited data, well, THAT would be worth it.
@McPOW Does apple charge eft not only carriers should not os developers heck they did nothing but the os htc did the rest
@(Unverified)
The Nexus One is now the world's greatest smartphone. The "superphone", "iPhone killer". Nobody will be terminating their contract, so what's the big deal. Has anyone here that ever tried the magnificent Nexus One decided to return it? No? I didn't think so.
Google's just making doubly sure the mildly dissatisfied pussies don't get cold feet, terminate early and buy an iPhone instead. Google's been taking lessons from a few "wise guys" on how to make consumers tow the line.
@Phonejunkie31 Yes, Apple did back with iPhone 1.0. Google is paying the subsidy here, this is the standard practice with 3rd party phone resellers. The industry is f'd up right now, and in fact this is exactly what Google is working to change with their phone store. One step at a time.
@Spunkie
Right - the only bad one here is TMO--- right..
Why doesn't Google give away the phone - i mean the give gmail away for free; now they have the rights to search each and every email (ever go to Google portal?) Who knows what they plan with the N1 - NX??
Oh yea, i forgot Google can do no wrong.. LOL
@McPOW
"Clearly if there is anyone at fault here its T-mobile who is putting a unwarranted $200 fee on their contract. The $350 ETF is 100% justified since it is Google who are the ones subsidizing this phone. But you already knew that and are shamelessly misrepresenting the facts to get page hits."
Really? If you're so smart to leave dick headed comments like this, why don't you explain to us all exactly why Google is so willing to be the ONLY one in this partnership to put money towards a phone for T-Mobile customers? I mean, obviously its beyond any type of business agreement at this point. So please, enlighten us.
buggy huh? that's really expensive.
Not if you can keep the phone after early termination (it's not locked), so you have a $500 phone and paid $180 or whatever it is for the discounted one, but you presumably also used it a while on the network, so it's not THAT outlandish, you should not sign years long contracts before thinking a bit anyway.
On what basis does Google think they're entitled to an ETF? I thought the subsidized version was subsidized by money from the carriers, not Google themselves?
The basis that you're getting the phone from Google, not T-Mobile. It's T-Mobile that isn't entitled to the ETF
@EGOvoruhk
Actually, it would make sense that BOTH companies are putting money up front. I mean, really, why would sell their phone @ < $500 just because you signed up with T-Mobile? Kindness of their heart? I don't think so...
@credo
*correction. "why would Google sell..."
@EGOvoruhk T-Mo has just as much to an ETF as does Google. They are subsidizing the phone, so If you cancel your contract early, they are losing money.
@EGOvoruhk We do not know how money changes hands between Google and T-Mobile to figure out who gets to claim they are only recovering a subsidy.
As such it is unwise to pick a winner or loser in this battle for who is wrong.
Secondly, regardless of why a fee is charged, both fees can be categorized as liquidated damages, in which case, the reason behind the number is irrelevant to the discussion.
No No! Google is not like other companies! They don't care about profits! They actually LOVE us!
I mean they are OPEN™. Duh!
@Titanium Man
They can care about customers AND to keep happy shareholders.
@Titanium Man
Actually the google fee really is only there to make up lost money since it falls off in just 120 days. In this case its t-mobile thats charging a fee they have no right.
@Titanium Man
i really love OPEN with trademark
@prem Except OPEN™ is a registered trademark of American Express!
Ouch...
And your point is? We have already known about this. This is a non-issue. They are doing this to stop people from signing up with T-Mobile and paying $180 for the phone, cancelling and paying the $175 ETF, and getting away with a phone for less than retail. The original subsidy is from Google, NOT T-Mobile. $180 + $350 = $530; the retail price of the Nexus One. The other $175 ETF is the normal T-Mobile ETF for nullifying your contract.
@staulkor
Okay then, why is T-mobile entitled to an ETF when they didn't subsidize the phone? Someone is getting free money here.
@Martin C One has signed an agreement with T-Mobile to have service for two years. If you want to nullify your contract, there is a fee attached to it. This is standard practice as I am sure everyone knows. There are always stipulations attached to prematurely cancelling a contract.
@staulkor That's normal, because the carrier is normally subsidizing the phone. There shouldn't be an ETF with T-Mobile if they're not subsidizing the phone.
@Bootes
Not necessarily. If you enter into a contract with another party (whether it's a wireless carrier, any other company, or a person), both sides agree to hold up to certain terms. If you decide to effectively say, "I know I signed an agreement that allowed you to count on 2 years' worth of revenue from me, but you know what I don't think I want to pay it," then it shouldn't be a surprise that there might be a penalty for that. The ETF in this case isn't to recoup the cost of a subsidized phone, it's simply a penalty for a breach of contract.
@John H
That's not the point. You don't cause T-mobile any sort of financial distress by backing out of this contract because they "were counting on this revenue." ETFs are allowed (legally, by the FCC) because a company is making some upfront concessions for a long term revenue stream. This concession is usually through subsidized equipment or a reduced monthly fee for service. Neither is occurring in this case. In fact - not only is T-mobile not subsidizing the N1, they're also charging MORE for a contract than they are for a month-by-month plan. Ridiculous.
You seem to think that it's ok for T-mobile to include this ETF "just because." Contractual obligations aren't always legal and simply including a statement in a contract doesn't make it appropriate, nor does it make it binding. Signing a contract that says "you can kill me" doesn't give someone the right to actually commit murder. I'm amazed by this common misconception among the population.
I'm willing to bet that T-mobile's ETF can be overturned. Maybe Nilay can chime in on this, considering he's always boasting about his legal qualifications. :P
=|
@Bootes
Seriously, who do you think is subsidizing the phone? One would assume that T-Mobile is paying Google just like AT&T pays Apple subsidies (and ex-US carriers likewise) for those iPhones that Apple sells through their stores with contracts. My guess would be that Google would be the only one levying the ETF in this case, funneling a substantial percentage of it back to T-Mobile. I'd hazard to guess that T-Mobile won't be charging a separate ETF directly.
It's hard for me to imagine that Google would put such a heavy subsidy on the phone if they weren't getting most of that money back from the carrier.
@theNEOone
I believe you're right; I think the ETF is only allowable because it's essentially a liquidated damages clause. I don't think it's legal if it's a penalty.
This whole setup just stinks, and clearly was VERY poorly thought out by G and Tmob.
@staulkor
*confused*
Does not a contract generally include a statement of restitution in the event the contract is broken?
Isn't that what T-Mo is including in this 2 year agreement? The user getting a subsidized phone is agreeing to remain a customer of T-Mo. In the event one chooses not to fulfill the contract, an End of Term Fee is charged.
So, what's that got to do with equipment?
If you lease a home and move out before the term of the lease, you will tend to notice a nifty little charge for early lease termination *in addition* to percentage charge for each of the remaining months left on the original lease contract.
I'm no fan of all the fees, but this is what happens when consumers respond to the word "free", and producers need a way to make it look as such.
Perhaps this is Google's/T-Mo's way of gently encouraging us to pay the actual cost of our toys?
(shrug)
or maybe it's just a plot they've set up with the credit industry.
"Hey, I know! I'll just pay for it up front with my Chase Visa and save money AND still get to make payments! Yeah! I'm a savvy consumer!"
Does anybody know if there's some round-about way of getting it via Flexpay?
@c w j
oops. meant for Mart C, not staulkor.
@staulkor
the carriers have always said that ETF was to make up for the phone subsidy. Why is t-mobile getting free money for? It is free money.