FCC opens investigation into Verizon’s doubling of ETF

The FCC has opened an investigation following Verizon’s announcement that they would be doubling their ETF from $175 to $350. Verizon claims the rising costs of subsidizing handsets result in higher monetary losses when a customer leaves before their contract is up, leaving them little choice but to raise the early termination fee to cover that rise.

The FCC doesn’t appear to be buying it. They sent Verizon a stern letter asking them to explain themselves and questioning if the increased ETF is being made clear to customers before they sign up or renew their contracts.

“Please provide a description of whether or how a customer seeking to sign up for Verizon Wireless service by first selecting a device or service plan on the Verizon Wireless website would be able to find out about the levels and terms and conditions of the ETF, other than by calling up the formal Customer Agreement accessible in small type at the bottom of the web page, “the Commission asks. “It appears that if a customer cancels a two-year contract after 23 months, the customer would still owe an ETF of $120. Is this correct? If the ETF is meant to recoup the wholesale cost of the phone over the life of the contract, why does a $120 ETF apply?”

Since no other carrier has made a move to also raise their ETFs, Verizon is left to defend itself both to the commission and to customers. The FCC is also launching an inquiry into ETFs in general and will use Verizon’s responses in that investigation as well. Sen. Amy Klobuchar (D-Minn) has introduced a bill that would limit the ETF’s customers are now forced to pay when they want to leave their carrier before their contract is up, which gives Verizon even more reason to be squirming. They have until December 17th to answer the FTC’s questions.

Read [PCWorld]