A document first announced by Boy Genius Report indicates Verizon Wireless plans to increase the cost of its early termination fee for smartphones up to $350, with other wireless providers reportedly ready to follow in Verizon's footsteps.
"Beginning 11/15/09, customers purchasing an Advanced Device with a 1 or 2 year service agreement will be subject to an ETF of up to $350 if they disconnect service prior to completing the minimum term," according to the ETF change document acquired by BGR. "The $350 ETF will decrease by $10 for each month of service completed."
So, if a consumer completes five months of a two-year agreement, the cost of the ETF will be $300, which is still a hefty sum.
Subscribers won't like the ETF increase, but Verizon and other mobile carriers will defend themselves by mentioning each person who purchases a smartphone does so at a subsidized price. The carrier must then pay the remaining fee to the handset manufacturer directly, so it's simple economics. Carriers don't want to pay the subsidized phone costs if a subscriber is going to cancel their contract before the two-year commitment is up.
Although the ETF on smartphones is changing, Verizon will keep the $175 ETF on regular handsets the same price. For dumbphones, the ETF drops $5 per month for each successfully completed month of the two-year contract, according to Verizon.
ETFs have been around for years, with penalties ranging from $175 to $200, and largely haven't accounted for the rising popularity of smartphones. The U.S. government is currently investigating several issues related to the mobile industry, and it's possible VZW's ETF fee increase could also go under federal scrutiny.
Depending on the reception VZW gets -- and it likely won't be a favorable one from subscribers -- AT&T and other major wireless providers could raise their ETF prices in the future as well.
