When consumer outrage abounds, it's best to lay low for a bit if you disagree. I'm glad, then, that Michelle covered the
Verizon raising ETFs story so well. Consumers, individually and in groups, bemoaned the ETF increase on smartphones, claiming that it represented just another way wireless companies extort money from hard working citizens. While I think
Verizon could claim solid justification for the increase, they did themselves no favors by claiming “advertising costs, commissions for sales personnel, and store costs” as part the reason for assessing a larger ETF. Now another company, Google, will
impose a hefty early termination fee on customers who purchase a subsidized Nexus One handset. Will this also come before the FCC?
For starters, as I hinted in the above paragraph, carriers can justify a $350 ETF if they keep their stories straight. Take Verizon for example. If you walk into a store and buy a BlackBerry Tour, it will cost you $200. If you buy it online, it will cost just $100. The month to month price on the device is $490. If you cancel your plan a month or so later, you'll have to pay somewhere around a $345 early termination fee because of the proration (a topic for another day). Assuming you get the $100 mail-in rebate from the store, you'd have paid $445 for the device, or $45 less than the device would have cost without service. But, since you presumably paid your bill in that month or so, Verizon would have recouped some or all of that $45. The transaction would be relatively even.
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