If you’re thinking about buying a smartphone from Verizon Wireless on a new 2-year contract just so you can pay the early termination fee (ETF) and sell the extra handset for a profit on eBay or Craigslist, you had better get on it. Starting November 15, Verizon Wireless will be bumping up their ETF for “advanced devices” to a whopping $350. On the upside, Verizon will drop the ETF by $10 for every month a customer stays on their contract.
It’s not clear what “advanced devices” means, but it’s a good bet that the term covers higher-end hardware, like smartphones. The decision to increase the fee isn’t going to go over well with a lot of people, especially those that want to keep the option of dropping VZW for a reasonable ETF. But, it does make sense. All carriers, Verizon Wireless included, provide deep discounts on smartphones by subsidizing the cost of the handset. The idea is to make back the subsidies with long-term contracts and data plans. A higher ETF helps ensure that a customer will honor their contract, and if they decide to leave, the ETF will help the carrier make back its subsidy costs.