The FCC has sent letters to AT&T, Google, Sprint, T-Mobile and Verizon Wireless asking what an ETF (Early Termination Fee) is and how it benefits the company. It’s about time this happened. American operators have an invisible monopoly when it comes to handset financing. If you don’t want to spend $600 on that smartphone, and would prefer to pay it off over 12 to 24 months, there is only one company that can offer you that kind of loan. Imagine if the same system was in place for buying homes or automobiles? The government would never allow it, and it looks like the FCC is getting serious about how operators are using/abusing the ETF system to keep customers. Here are the 12 questions they’re asking everyone, they all have until February 23, 2010 to respond:
- Do your ETFs apply to all service plans or only some? If so, which ones?
- What is the amount of the ETF for each service plan where ETFs apply? If there are different ETFs for different plans, what is the rationale for those differences?
- How much of a discount on handset purchase is given in return for a consumer accepting an ETF? Does the amount of the discount differ by device, and if so, how?
- Does the ETF itself vary by device (e.g., higher ETFs for advanced devices)? If higher ETFs apply to a certain class of devices, exactly how is that class defined?
- Is it possible for consumers to buy a handset from you at full price to avoid an ETF? If this is possible, can consumers buy unsubsidized handsets online, as well as at brick-and-mortar stores?
- Do monthly service rates and terms differ: (1) between customers who assume a term commitment and accept an ETF, and those who don’t, and (2) between customers who purchase an unsubsidized device (either from your company or a third party), and those who purchase a subsidized device? If so, how do they differ, and what is the rationale for the difference? Can customers easily determine the impacts of their decisions and their rates and terms?
- Are ETFs prorated so that the customer’s liability decreases over time? If so, what is the exact schedule by which they are prorated?
- If a customer renews his or her contract without buying a new handset, does his or her monthly service fee change in any way?
- How long is the trial period during which consumers can cancel their service without an ETF penalty? If they cancel, can they return the handset? If they return it, will they receive a full refund, no refund, or a refund minus a restocking and/or refurbishing fee?
- When do consumers receive their first bill under your service plans? How does the trial period relate, if at all, to receipt of the first bill?
- Are there consumer fees or charges in addition to ETFs if consumers buy handsets and/or service plans from online phone dealers, such as Amazon, LetsTalk, and
Simplexity (d/b/a Wirefly), or from a service provider, if a customer does not complete the contract term? If so, what are they, and what are their levels, terms, and conditions? Do the fees or charges affect the ETFs and if so, how?
- Press reports and public statements from wireless companies have attributed ETFs to several different factors. What is the rationale for your ETF(s), and how specifically do the structure and level of those ETF(s) relate to that rationale?
The implications of these series of questions are extraordinary. If the FCC doesn’t like how American operators are using the ETF system then they could abolish it or at least regulate and make it much more fair for consumers. Here is hoping something radical happens, soon.
[Via: Phone Scoop]
[Image via: Gizmodo]