Verizon, AT&T, Sprint, T-Mobile, and Google all respond to FCC's ETF inquiry
By Chris Ziegler 
posted February 23rd 2010 7:30PM
posted February 23rd 2010 7:30PM
All of the players roped into the FCC's early termination fee inquiry -- T-Mobile, Sprint, AT&T, Verizon, and Google -- have met the Fed's February 23 deadline for responding, and needless to say, you could destroy a small forest with the amount of paperwork that's been sent back to Washington. The majority of the inquiry focused on carriers' ETF pricing structure and whether there are different ETFs involved based on the device a customer chooses, and the subtleties in the differences between answers from different carriers are pretty fascinating.T-Mobile seems resolute that a single $200 ETF is the way to go and emphasizes that its customers can avoid the fee altogether by going with an Even More Plus plan, while Sprint says that it "continue[s] to evaluate the market" with regard to a multiple ETF setup. Google, meanwhile, is quick to note that it's just dropped its $350 Equipment Recovery Fee down to $150, though that amount still effectively represents the only device in T-Mobile's subsidized lineup that commands a grand total ETF greater than $200 upon cancellation -- but it gets even better later on when they get snippy for being lumped in with carriers on the inquiry and remind the FCC that the ERF reduction had been in the planning stages prior to the inquiry being issued. At any rate, they note that the ERF isn't intended as a revenue stream -- rather, it's a way to recoup the losses Google incurs when T-Mobile asks for its commission back if a customer cancels within 120 days (as you might imagine, T-Mobile conveniently fails to mention this point in its own reply).
Verizon -- which effectively triggered this whole mess by introducing its two-tier ETF -- basically echoes much of what it said in its last response, a surprising move considering the Commission's general displeasure with it, so it'll be interesting to see what kind of reaction it garners this time around. AT&T takes perhaps the most pragmatic approach through most of its response, answering the FCC's questions very matter-of-factly, but goes into a great deal of depth rationalizing early termination fees at the tail end and takes the opportunity to remind everyone that they've offered both commitment-free month-to-month and prepaid service for many years.
Something tells us this isn't the last we've heard on the subject, but for the time being, check out everyone's responses in the galleries below (more after the break).
[Thanks, Dan P.]
When you consider how many billions of people, even in impoverished countries, operate cell phones, it's hard to argue that the pricing is unfair when even the poorest among us can afford one. That's the whole irony of the FCC stirring up trouble over the pricing.
@Raffi256
Yet other countries don't charge exorbitant ETF fees, do they? In other countries you can easily buy a cheap unlocked GSM phone and slap a sim card in. Thanks to 'special' GSM 3G and CDMA bands we don't have that option in the U.S. So we're forced to purchase an expensive handset from one of the big 4 if we want any chance of reliable service.
By creating this oligarchy of phone companies, we're practically forced to choose contracts because of how expensive even basic dumbphones cost off contract. When you plan to stay with the company for two years it's a no-brainer to buy a smartphone on contract for half the price of a dumbphone off contract.
However, things happen, and you could lose your job or hit financial hardship and not be able to continue your service. These are the people the FCC is trying to protect. The people who like contract-hopping to get the next coolest phone just get in on the action even thought they caused the problem in the first place.
Personally, I could see a two level ETF, with a reasonable one for full cancellation of service, and a higher one if you port your number to another service provider (unless you move and can prove coverage issues). That might conflict with the number portability act or whatever it's called though, and some people would just drop service and get a new number. It would be a good deterrent to those who want to keep their number though! I agree, and contract is a decision you choose to make, and you should carry it out, barring unforeseen misfortune (unemployment, house burns, death...).
ETFs are a joke. It is just big carriers trying to make more money. AT&T's net income in 08 was over 10 billion dollars. There is no reason they should be charging more and more for service that isn't relevant. The reailty is 2 years is not a good choice of contract years. I have no problem with a $150 ETF if there is a break in contract for a 1 year contract. 2 years is simply too long, and the ETFs cover more than lost ground to say the least.
Ok, so I get it - You are going to pay for the phone itself one way or another. So if ETF's are in place to protect the carriers investment in giving people a free or discounted phone, is it really necessary to lock the phone to the carrier?
Why not just give people the phone for 40 % of the retail price and if you cancel you got to pay the other 60% divided by the amount of months you have been a customer end of story.
Thats probably more than most current prices and it is simple.
I certainly believe a carrier should be able to recover money it fronted for the purchase of handset. But that value should be dependent on the handset, I don't know how a standard ETF could cover that. There needs to be a sliding scale ETF based on the handset you were subsidized.
The real issue the FCC should be dealing with is why carriers are the only "real" source to get phones. This is the same issue that happened when "Ma Bell" was the only place you could buy a landline phone. Phones should be able to be sold in Best Buy directly and activated on the carrier of your choosing, obviously cdma phone would be restricted to cdma networks and gsm to gsm. This would completely eliminate ETF's for people who choose to not subsidize their phone.
I have no problems with ETF for subsidized phones but there should be some real options out there for people who don't want to buy from a carrier directly.
These EFTs are all due to subsidized phones. You know, the cell hone companies paying for half if not more of the cost of the phone.
Could the FCC cause the phone companies to say screw you, everyone now pays full retail price for a new phone? Don't be shocked if it happens. The FCC is overstepping here IMO. Trust me, it's better to have subsidized phones with EFTs than to have to pay full retail. Some of you people are just stupid.
I really can get behind the idea of no-commitment on the phones, sure. But bear in mind, the Wireless companies don't make the phones, they just sell them. And they don't set the prices either, they just subsidize them. Now, you can go to Newegg.com or Tigerdirect.com and a bunch of other places on the web and buy unlocked phones for full price, but then you have to be careful about where to take those phones. To my knowledge, and feel free to correct my if I'm wrong, AT&T is the only one out there who offers the option to start service with no contract if you have your own device, yes? No? And I THINK they're the only ones who offer the option to buy a phone at full price with no contract. So the options are out there. You just have to know how to take advantage of them.
AT&T would have an argument IF they offered their popular phones on prepaid service.
This is ridiculous. Buy a phone at full market price or buy a subsidized phone by agreeing to stay with the carrier for set amount of time. What is so difficult to understand? Granted, if Verizon thinks they can charge $350 for an ETF, they're going to have to give you free phones that are up to Droid's specs.
I hope the FTC is only trying to keep ETFs in check and not get rid of them. I don't want to pay $700 for the best smartphone.
Courts need to stop viewing ETFs as alternate courses of performance. It's a lame, and in my opinion, legally invalid way of viewing the contract. If they analyzed the problem as a Liquidated Damages question, the ETF will fail EVERY time because it's clearly designed to penalize the breaching party. AKA you.
I don't mind ETF, but no more freakin provider-locked phones. They already got me on a contract, so why does my phone is locked to a single provider? Discounting the CDMA providers, T-Mo is the only provider that actually have a set policy for unlocking, albeit they don't advertise it.
I wonder that no one comments about the fact that the carriers do not give a lower rate, once the 'subsidy' is paid off. It is even more obvious when you 'bring-your-own-phone' to a carrier. The monthly rate is the same no matter how long you stay with the PLAN. Seems that is the bigger problem, of which the ETF is just the tip of the problem.
Verizon's ETF is absolutely ridiculous, but I agree that ETFs are needed for cell phone contracts. I think they whohkd be based on the difference between the current price of the phone and the price of the phone on contract, and should be prorated so that people aren't paying $100 one month away from the contract end.
I found an error in Verizon's response to the FCC. in question 9 where it asks about the trial period, Verizon says that if you return equipment within 30 days, you get a full refund. This is not correct, you have to pay a $35 restocking fee. Hmmm. Pretty big oversight, considering they've been doing this for over a year.
My take on the ETF is that it's purposely high, because it's meant to be punitive, in the case that you want to break your contract. I hate it, but that's what they get to set.
You people know nothing! Carriers have bills to pay! Utilities, employees, maintenance, etc. It's a business and their out to make profit. It's sad, the only reason you people have phones (iPhone) is because it's subside! Don't get me started... I'm gone.
Honestly, imo, theres shouldn't be a flat ETF. The ETF should be optional, and dependent upon the device. If you cancel your service, you should have the option of either paying the different between your on contract cost of the device and its current no commitment price from the carrier, or, have the option to simply give up the device as well and owe nothing, as long as its in good condition. That way they get their hardware back to sell refurbished, or use as parts.
The fact that carriers are imposing such high ETFs just goes to show that no one is truly confident in their devices or services, because if they were, they'd let their network and phones speak for themselves.
They should be doing something better with this like why is it that if you bring your own phone or buy a phone at retail price there is no discount on your bill except for with T Mobile.