FCC Investigates Verizon’s Early-Termination Fees

Without question, one of the biggest advances in technology over the past decade or so that affects a great number of people is in the mobile space. Today, it seems like the majority of people out there own a cell phone, and many who do, own one in place of their home phone. It’s no wonder, either, when pricing and minute allowances make it possible. But, there is one major downside to cell phones, and as far as I’m aware, there isn’t a single telco without the issue.

Of course, I’m talking about the EFT, or early-termination fee. This is a fee that’s incurred whenever you opt-out of your contract before it’s completed, and it’s never modest. Up until a month ago, Verizon’s EFT’s were priced at $175, which seems truly ridiculous, especially for those who’ve completed at least half or more of their contract. What did it change too, then? Well, it doubled, so it sits at $350. As far as I know, the EFT is only this high on “high-end” cell phones, like the Curve, Droid, Dare and so forth.

Any way you look at it, the fees are incredibly high, especially given the monthly cell phone plans we all pay, which again, are overpriced. The FCC apparently agrees, because it’s intervened and is asking the hard questions to Verizon. The biggest issue isn’t that there exists an EFT, but the fact that it’s so high, and also that it never changes, regardless of when you opt-out (even if you cancel a month before, the fee is the same).

Verizon has a variety of excuses it’s using, and the most common one is that it has to get back the cost of the device, and in most cases, it loses money, even after an EFT, because the prices for the handsets are so expensive. I have a hard time believing this, because if companies are buying these handsets in vast quantities as they are, they’d be getting incredible deals, not paying anywhere near the retail price.

This isn’t the only problem the FCC is investigating, but it’s one that could help consumers  a great deal in the future. I understand an EFT, but I don’t understand why it doesn’t go down as you go through your contract. If that changes, consumers will win. And if you still don’t like the EFT at all, then don’t get the expensive phones… it’s that simple, really.

The new ETFs comes with a new pro-rating system—ten dollars sliced off the fee each month—that still leaves quitters paying over 100 bucks, even if they terminate at the very end of the two-year deal. Klobuchar sent a letter to Verizon president and CEO Lowell C. McAdam calling the hike “anti-consumer and anti-competitive,” and asked the FCC to probe the telco about the move.