How Will Verizon Defend Higher Early Termination Fees?
Especially considering that the FCC that had already begun an investigation into the lower ETF charged previously?
That's a question asked across the industry after the Commission on Friday sent a letter to the wireless carrier, demanding answers by Dec. 17. The letter also closely questions Verizon as to how it discloses information about its fees to potential customers.
My guess: Verizon will back down before the inquiry proceeds very far.
Verizon increased its ETF from $175 to $350, effective Nov. 15, for certain "advanced products." The company has previously said the increase was necessary to offset the increasing cost of subsidizing its customers' handset purchases.
But, if that were the only reason, shouldn't the fee be prorated across the term of the contract? In its letter, the Commission asked why a customer who quit in the next-to-last month of a 24 month contract could still owe Verizon a $120 EFT.
That makes the fee increase seem intended to make it prohibitively expensive for customers to leave Verizon at any point during their contract, regardless of the handset subsidy involved.
The FCC inquiry comes after Sen. Amy Klobuchar (D-Minn) introduced a bill that would curb the penalties customers are required to pay for early cancellation of a wireless contract.
I had expected that once Verizon instituted the change that other major carriers would quickly follow suit. None have, however, leaving Verizon to answer the questions alone. It also makes the subsidization reason appear flimsy, since competitors have been content to leave their ETFs as-is.
Verizon could decide to fight for its fee increase, but my bet is the company will back down.