Just a few years ago, every Verizon Wireless customer was eligible towards a $100 discount when they upgraded their phone after their two-year contract expired. In 2007, I wrote an article about Verizon downgrading their Upgrade Plan. Their new “Every Two Plan” would only entitle customers paying over $80 a month on services a $100 discount towards a new phone, while the rest only received a $50 discount. They recently once again made some changes which has upset many customers.
Verizon Wireless’s latest changes apply to their Early Termination Fee (ETF). Normally if you choose to cancel your two-year contract, there would be a $175 fee for any device. As of November 15th, there’s a new fee for Smartphone owners, categorized as “advance devices” by Verizon. If you were to purchase a smartphone such as the Motorola Droid and decide to switch providers or cancel your contract, you’ll now have to pay a $350 ETF. If you moved to a new location that doesn’t have signal and decided to cancel your service the second month into the contract, that would mean you would end up paying nearly $550 for just the device. While Verizon does knock $10 off the ETF each month, that’s still a $130 left over to shell out 22 months into a contract. Sen. Amy Klobuchar (D-Minn.) has even introduced a bill to revert this change since it’s “anti-competitive” and “anti-consumer.” As for now, fortunately, non-smartphone devices still only have a $175 ETF.
It’s true that the devices such as the Motorola Droid are heavily subsidized; otherwise we would have to pay a couple hundred bucks extra up front. However the required Smartphone data plans with the cheapest calling plans will still cost an average customer nearly $2000 over a two-year period. Even with the subsidy for the device calculated in, that’s still large amount to spend. While this won’t affect customers that don’t plan on canceling their contracts, it would still be nice to at least see Verizon increase the amount knocked off the ETF each month by at least a couple dollars so that the ETF would be close to zero a month before a contract ends.
While it’s great to see new high tech phones with more features become available for lower prices each year, it’s a bit depressing when you realize the service cost through just about every provider hasn’t.
What do you all think about the increased ETF? Is it fair to charge Smartphone owners more?