Verizon to FCC: Our ETF increase helps us pay for advertising

Verizon has been getting a lot of press recently for the marketing war it’s waging against AT&T, and it’s been distracting a lot of people from the real problem with Verizon Wireless – their excessive $350 Early Termination Fee (ETF). The wireless carrier recently upped their ETF for “advanced devices” – which has largely been interpreted to mean “smartphones” like the Motorola DROID – which piqued the FCC’s interest. Today, Verizon has responded to the FCC’s inquiry into the carrier’s ETF practices, essentially defending their need for outlandish ETFs as a means to recoup handset costs, marketing expenses and even the costs associated with network infrastructure.

You can find the entire 77-page response here, but the short-and-sweet version of the response goes like this:

Verizon needs to charge a $350 ETF to help offset the higher costs of “advanced devices”
The higher ETF helps hedge against customers that cancel their contract early after paying a discounted price for the phone
The ETF helps pay for marketing costs
The ETF helps pay for network infrastructure costs
The ETF helps pay for store costs and commissions
Verizon decreases the ETF for every month of a customer’s contract (which still leaves $120 after the 23rd month)

Basically, what Verizon is saying is that it is using the ETF to help pay for parts of its business that customers shouldn’t be responsible for. Shouldn’t it be Verizon’s own responsibility to market their network, build out their network, and maintain its nationwide retail chain?

There was a time in the US wireless industry when an ETF was used only to help a carrier recoup the costs associated with subsidizing handsets for customers, should they decide to end their contract early. If Verizon is allowed to get away with their new ETF, it could set a precedent for carriers being allowed to charge higher ETFs as a means to bump up revenue.

Verizon’s response on ETF to the FCC

About The Author

Will Park

Will hails from The City of Angels - Los Angeles, California. He spends his time playing with his numerous gadgets and looking forward to seeing what future holds for mobile technology. An avid promoter of a fully "digital" life, he promotes the widespread adoption of truly mobile, paper-less living. He dreams of the day when he can go completely digital. No more snail mail, paper receipts, bound books, notepads/spiral notebooks, credit cards, hard currency. He's a digital warrior - fighting for the converged life. He is an idealist and a realist - he has a perfect view of what the world should be but knows that the world is not perfect. Can we ever hope to see Will's dream become reality? We'll see...

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