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Cellphones The Almighty Buck

Verizon Doubles Early Termination Fee and More 520

Posted by timothy
from the infuriating-design dept.
An anonymous reader writes "If you buy a smartphone through Verizon, be prepared for an increase in the early termination fee. Verizon is doubling the phone-subsidy to $350. What's more, is that Verizon also actively charges customers for accidental data transmissions of as little as 0.02kb. 'They configure the phones to have multiple easily hit keystrokes to launch 'Get it now' or 'Mobile Web'—usually a single key like an arrow key. [...] The instant you call the function, they charge you the data fee. We cancel these unintended requests as fast as we can hit the End key, but it doesn't matter; they've told me that ANY data--even one kilobyte--is billed as 1MB. The damage is done.'"
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Verizon Doubles Early Termination Fee and More

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  • Wow (Score:5, Insightful)

    by SirBigSpur (1677306) on Thursday November 12, 2009 @05:29PM (#30079290)
    I hate Verizon even more now, I didn't think it was possible.
  • by Anita Coney (648748) on Thursday November 12, 2009 @05:32PM (#30079330) Homepage

    And yet people make fun of me for using a TracFone, for about only $9 per month.

  • by CannonballHead (842625) on Thursday November 12, 2009 @05:32PM (#30079332)

    If you buy a smartphone through Verizon, be prepared for an increase in the early termination fee. Verizon is doubling the phone-subsidy to $350.

    You sign a contract with Verizon. Verizon is providing the services. You are contracting with them and saying you will use their services for X years. It's a contract. Breaking a contract is something where both parties agree what the response should be. In this case, Verizon is saying that you are charged $350 if you break your contract and stop paying them what you said you would pay them.

    Honestly, I don't see what the deal is. Chances are you are paying what... average of $100 a month for a Verizon plan? So $350 is 3.5 months? Paying 3.5 months for breaking a 24 month contract doesn't seem so unreasonable.

    The fact that they ARE using that money to subsidize their "free phone" stuff is irrelevant. If they are able to apply money they get from termination fees to offer cheaper phones and get more customers that way, I see no problem with that.

    But... oh well. It's much more interesting to complain about early termination fees as if they are hidden or sneaky or something. As if contracts should be able to be broken by either party without any consequences...

  • by Anonymous Coward on Thursday November 12, 2009 @05:33PM (#30079360)

    They'll make more now than the class-action will cost later.

  • Re:new york times (Score:4, Insightful)

    by ircmaxell (1117387) on Thursday November 12, 2009 @05:33PM (#30079370) Homepage
    Actually, I think their timing couldn't be better! I've got my droid on the lower cancel penalty... For once the early adopters get benefits!

    This would make me not get Verizon, if I didn't already have it without the hike tho...
  • Termination Fees (Score:4, Insightful)

    by MozeeToby (1163751) on Thursday November 12, 2009 @05:34PM (#30079384)

    I understand, on principle why they charge early termination fees. $350 for a smartphone seems extreme, but taking the new Droid for example, the phone costs $550 without a plan and the customer gets it for $200 which is right in line. What doesn't make sense is the fact that if I cancel my contract 1 year and 11 months in, I'm expected to pay the whole termination fee, despite the fact that Verizon has already made back $335 of it. That's just abussive. Termination fees should be proportional to the amount of the contract you are terminating and capped at the amount of subsidization on the phone.

  • by caffeinemessiah (918089) on Thursday November 12, 2009 @05:41PM (#30079500) Journal

    If you use data, it seems reasonable to me to charge a fee even if you just made "a mistake".

    Agreed...but the issue is not about paying for the 0.2kb HTTP request you just made, but rather paying for an entire MB worth of data. It's not like billing per kilobyte or even per BYTE is technically infeasible, so why can't you pay for a fractional MB if that's what you use? In fact, there is absolutely no justifiable technical reason for this -- it's pure asshat accounting. This is like plugging in a desk lamp into your wall outlet for 5 minutes and ComEd charging you for an entire kWh.

    You know it's asshat-ish when even AT&T has a better policy.

  • by tcc3 (958644) on Thursday November 12, 2009 @05:42PM (#30079534)

    You would be right if the contract actually worked both ways. If you have problem with your service, or a billing dispute, or any of a number of other problems, their answer is likely to be "Too bad."

    The customer is left with two choices - a very costly and unlikely to succeed lawsuit, or to walk. Taking your business elsewhere is sometimes the only effective protest against a corporate bully.

  • by Zantac69 (1331461) on Thursday November 12, 2009 @05:44PM (#30079578) Journal

    As for early termination fees increasing, that's what gets you nice phones for cheap. I don't really see a problem with these fees since they are making phones more affordable given that you would have a phone plan anyway.

    The pisser is that I want to BUY the phone by itself...and then be able to go to whatever provider I wanted. "Cheap phones" be damned! They should be clear about how much the phone is subsidized...and for how long...and make that as an "adder" to the normal monthly charge. You can either BUY a Droid for $550 outright and have a $40/mo bill...or get it for "Free" and pay an addl $28/month for 24 months (threw in some interest to boot). If you cancel after 12 months, then you owe 12*28, or $336.

    But that makes too much sense...carriers would never go for that.

  • by EvilNTUser (573674) on Thursday November 12, 2009 @05:45PM (#30079594)

    Haven't you noticed? Nowadays we don't vote with our wallets any more, we just dash to the lowest up front cost and then start bitching when we realize we can't act like children. Then we do it again with the next company, because we now "hate" the first.

  • Free market (Score:2, Insightful)

    by cryfreedomlove (929828) on Thursday November 12, 2009 @05:47PM (#30079622)
    If you don't like the termination fee then you should simply use a competing service. Your choice to use Verizon is voluntary. Eventually the market will dictate what Verizon can charge.
  • by Jthon (595383) on Thursday November 12, 2009 @05:51PM (#30079718)

    The problem for me isn't that they have ETF fees, in fact given most phones have a subsidy I under stand that. My problem is that you cannot sign a contract without an ETF even if you provide your own phone. On top of that if you buy a phone without a subsidy it's not like you can negotiate a service discount with Verizon. You pay the same amount in either case and that's not really fair.

    If Verizon actually cared about the customer they would offer a choice of the following two plan options.

    1. Subsidized phone, contract, and ETF. You pay for you phone over the life of your contract, basically you're leasing the phone.

    2. Unsubsidized phone, no contract, no ETF, discounted plan rate. You buy the phone outright since you paid full price for it you should save the difference between the price you paid and the subsidized price over the same length of time as the contract from option 1.

    In fact at one point I was going to sign up for a plan with Verizon and bring my own phone, but even if I didn't get a new phone from them to setup new service I had to agree to a 1 year contract which included an ETF. There was NO way to avoid the contract.

    This entire subsidy and ETF thing on your phone reminds me of old MA Bell. Before the original AT&T got broken up due to being a monopoly it wasn't actually possible for you to buy a telephone. You HAD to lease the phone from the phone company, and the phone company owned your phone. You basically got whatever phone Ma Bell wanted you to have. Cellphone companies are in that position now. While they say you "buy" your phone, you're really leasing it with no option to truly own it. If these companies were forced to offer a choice of phones, and didn't have these crazy contracts to hide behind I'm sure the cost of cellphone handsets would drop along through real competition.

  • by tommy (12973) on Thursday November 12, 2009 @05:52PM (#30079734) Homepage

    Using the DROID as an example:

    The DROID with no contract is $560.

    Math with the current termination fee:
    $200 for the phone +
    $175 to immediately break your contract =
    $375 (You save $185 over the no-contract price)

    Math with the new termination fee:
    $200 for the phone +
    $350 to immediately break your contract =
    $550 (You save $10 over the no-contract price)

    Either way you save more than simply buying the phone without a contract. The new fee is high, but I can understand their reasoning.

  • by bmajik (96670) <matt@mattevans.org> on Thursday November 12, 2009 @05:55PM (#30079788) Homepage Journal

    People who make a lot of calls aren't going to come in at $9 per month - pre-paids are only good for people with very low usage.

    Also, unlike most other services, with TracFone you don't own your number. You decide to switch carriers and your phone number goes with it. Personally keeping my number is worth quite a bit more than $350. To each his own though.

    I'm on T-mobile prepaid and i __love__ it. Yeah, i don't talk much. Verizon doesn't have any kind of cost effective service for customers like me. They lost my business a few years back and it's been wonderful.

    I can use any GSM phone i want to, I didn't have to tell t-mobile anything about who i am or how i plan on paying, and i think i pay less in a year than i was paying for 2 months when i had a verizon "share plan" for my wife and I.

    Finally -- with google voice [and other number re-direction schemes], the concept of even knowing your mobile number is officially uninteresting. I have been telling people the random southern california phone number i got issued when i bought my SIM card from ebay for a couple years now. Nobody cares what my number is, least of all me. If i want to truly own my number i will abstract my identity from my device, carrier, and location entirely -- like google voice (or skype in, or any other service) lets me do.

  • Where does it say "we'll charge you $1.99 every time you hit the wrong key when you flip the phone open" on the contract?

  • Re:Free market (Score:3, Insightful)

    by Evro (18923) * <evandhoffmanNO@SPAMgmail.com> on Thursday November 12, 2009 @06:05PM (#30079974) Homepage Journal

    Hopefully this is a joke. A free market is a nice idea, as is using a competing service, but what do you do when there are only 4 or 5 players in the market, and they all charge an early termination fee? It's collusion.

  • Re:Wow (Score:3, Insightful)

    by nschubach (922175) on Thursday November 12, 2009 @06:16PM (#30080170) Journal

    That's why they are doing it I assume. Someone could technically buy a Droid or other smart phone on contract for ~$350, break the contract and come out less than buying the phone outright. ($175 + $350 $600) so you'd be dumb to outright by it when you can get $75 (plus the $100 MIR) by buying a contract and canceling it.

  • by mea37 (1201159) on Thursday November 12, 2009 @06:34PM (#30080450)

    Can't speak for GP, but I am (and for many years have been) a Sprint PCS customer.

    Yes, they have some really poor customer service reps. HOWEVER, every time I've had a legitimate billing dispute, and once even when it was a grey area where I'd made an error that was my fault, they ended up giving me a refund.

    Guess what? That's the nature of cell phone call centers. The difference between "good" and "bad" in terms of call center staffing, is in a good call center only some of the CSR's lack both a working knowledge of the company's policies and a basic customer service skillset.

    Sometimes you have to call back. Sometimes you have to escalate to a manager. Sometimes you have to do both. In all cases it helps to not start out by being a jerk to the CSR who almost certainly isn't personally responsible for whatever situation you're calling about.

    The only people I've heard claim that the companies bully them on billing issues to the extent of stealing their money, are people who don't do their part to bring the issue to a smooth resolution.

  • by Rockoon (1252108) on Thursday November 12, 2009 @06:38PM (#30080514)
    TracFone's voice service ends up costing me about 14 cents per minute when they dont offer me a bonus code, which is rare.

    When you start talking about $350 charges I am thinking well fuck, thats at least 2500 minutes


    And you know what happens if I break my phone? I pay $30 for a new one, and I don't even have to argue with anybody.
  • Re:Wow (Score:3, Insightful)

    by Mister Whirly (964219) on Thursday November 12, 2009 @06:41PM (#30080546) Homepage
    Isn't there a way to lock the keypad, or is she smart enough to figure out how to unlock it as well?
  • by rocketPack (1255456) on Thursday November 12, 2009 @06:41PM (#30080552)
    yeah, I actually built a business model on this concept:

    1. Purchased DROID w/ contract
    2. Break contract, keep phone at $185 net profit
    3. Sell phone on eBay
    4. New user of phone activates phone on Verizon (because they have no choice of carrier when they buy the DROID) and pay Verizon a bunch of money that I wasn't going to pay
    5. New user changes their mind, sells the phone on eBay, and new-new user runs off to sign up with Verizon

    Ha! Ha! Ha! I really screwed Verizon over!!

    Hey, wait...


    Point is, no matter how much Verizon sells a phone for, that phone can only do one of two things: be used to make Verizon money, or go in the trash. Is it justifiable for a CARRIER-LOCKED PHONE to be contractually *fully* subsidized by the purchaser? If this was AT&T, T-Mobile, etc. I could see the point - I take my phone and run, screwing the company out of money. But with Verizon's phones, regardless of how long I am with them - the phone will keep making them money!

  • Re:new york times (Score:5, Insightful)

    by cdrguru (88047) on Thursday November 12, 2009 @06:49PM (#30080672) Homepage

    First rule of Verizon: the people in the stores know nothing and are not backed up by the home office.

    This means the people in the stores will tell you things that are completely wrong. This can result in your being charged extra for things because the people in the stores have no ability to enforce their promises. The 800 number is the only "customer service" that exists for Verizon. Even at a "store manager" level, they have no power, no training and no ability to get anything done. This pretty much means they are there to dial the phone and put the customer on the phone with the 800 number customer service people.

    The stores seem to exist to provide an image of local, in person support when none really exists. I have dealt with some good stores and some bad stores, but over all it doesn't make any difference - because the manager can promise you something or interpret some vague statement for you and then you get a bill that says exactly the opposite. Calling the 800 number gets responses like "they shouldn't have told you that" and worse.

    End result is very simple. Verizon stores are perhaps a place to pick up a phone. They cannot do anything more than that for you. Expect nothing and you will not be disappointed.

  • by blair1q (305137) on Thursday November 12, 2009 @06:50PM (#30080682) Journal

    The cure for that is to STOP GIVING AWAY FREE SPARE BLACKBERRIES, not FUCK ALL YOUR USERS.

  • Re:Blame, shifted (Score:3, Insightful)

    by caladine (1290184) on Thursday November 12, 2009 @06:54PM (#30080742)
    Given that they're the ones that make it such that the "up" key defaults to "Mobile Web" on their BREW based phones, my problem is still with Verizon. Given that the data charge granularity is ludicrous (orders of magnitude worse than their call granularity), my problem is still with Verizon.
  • Re:Wow (Score:3, Insightful)

    by Moridineas (213502) on Thursday November 12, 2009 @06:55PM (#30080750) Journal

    Really? In what service areas exactly do you find that Verizon's EVDO is "barely better" than any competing network--especially EDGE?

    Really? Did you even read what you linked to?

  • Re:new york times (Score:5, Insightful)

    by dgatwood (11270) on Thursday November 12, 2009 @07:14PM (#30081014) Journal

    I was on Verizon for several years. After a phone went bad (dropped in a stream), I went back to get a new one and they required me to change my cell plan to a new plan where nights and weekends moved an hour later. Well, that was somewhat annoying having it move to 8:00 because most of the people I call are two time zones over. Unfortunately, that phone was an utter piece of excrement and after a few months, it started dropping calls very frequently. I called Verizon to complain, and they said there was a tower down that might be affecting things. A few months later, I moved to a different area where there was no such problem and still dropped calls. After a few months of this, I decided to get another new phone that actually worked.

    Now they wanted me to move my nights and weekends to 9:00 P.M. I basically said "No way in hell. Can I get a phone without changing contracts if I pay full price?" They said no, and their only suggestion was to buy a phone on eBay. I looked at my options, priced out what I would get from other carriers, and switched to AT&T the next day. I even kept my old phone number. Even though AT&T's nights and weekends started at 9:00 just like Verizon's, I got so many more minutes than with my Verizon plan that it more than covered the difference. And when Cingular took them over and I changed to a plan with roll-over minutes, the difference became even more dramatic. Now, I'm on an iPhone plan. Every so often, I think about the friends and family who are still stuck on that nickel-and-dime-you-to-death Verizon network, and I feel sorry for them. AT&T sucks, too, of course, but not like Verizon does. It's good to see this news and know that they still haven't changed.

    As for me, I can't wait for LTE rollouts to become widespread. At that point, AT&T, T-Mobile, and Verizon will all be using compatible networks and people will be able to switch without changing phones. Then, these companies will have to start actually competing with each other instead of paying lip service to competing. You'll also see massive screaming to put an end to early termination fees if you provide your own equipment. Life will be better. Here's hoping, anyway. The only question is how long it will take before Sprint joins in and makes us a single-standard country as we should be....

  • by ElSupreme (1217088) on Thursday November 12, 2009 @07:30PM (#30081202)
    Which is a VERIZON UI.
  • by tkrotchko (124118) on Thursday November 12, 2009 @07:57PM (#30081492) Homepage

    "Contrary to the GP's post, the penalty is, in principle, because of the phone subsidy."

    I think that's incorrect.

    If you get a $200 phone for $100 because of 2 year agreement, not considering interest, you think, "right, subsidy of about $4.16 per month". But yet, when you hit the 25th month, the monthly service doesn't go down by $4.16. Worse, if you bring your own phone to the carrier, they don't lower the price.

    In my opinion, you're getting a subsidy for the difference between the "normal" price and the price with the two year plan because you've committed to a 24 month revenue stream. [That doesn't hold true in the second case though; if you bring your own phone and agree to a 2 year plan, you don't get a break in price]

    A fair termination fee would be the difference between the phone price you paid and the phone price without plan subtracting the amount of time that you paid them for the plan. Perhaps that should even be waived if you turn in the phone.

    But let's stop playing this game. Carriers charge people a lot of money for everything *because we pay it*. It has nothing to do with right or wrong.

  • Re:Wow (Score:2, Insightful)

    by sfbiker (1118091) on Thursday November 12, 2009 @08:21PM (#30081744)

    Or, you could go to the Verizon online service center, go to "Self Service Options->Add and delete Features" and select "Block Mobile Web", "Block VCast usage", "Block Ringtone Purchase", "Block Application Downloads", and "Block Premium SMS". Or just call Verizon and ask them to do the same.

    If your complaint is that *you* want those features but you don't want your daughter to access them, then I think the correct answer is "Don't give her your phone". Please don't ask manufacturers to make child-proof phones just in case some parent wants to use it as a toy. I'm an adult and I like my phones to be easy to use, even if features that sometimes cost money are easy to activate.

  • Re:Wow (Score:3, Insightful)

    by norpy (1277318) on Thursday November 12, 2009 @08:44PM (#30081948)

    if enough of us do it, maybe they'll stop charging it altogether.

    No they won't, if enough people start getting it waived some manager somewhere will notice it in his metrics and an order will come down from on-high and nobody will be able to waive it anymore

    the real issue is lack of real competition. Lawmakers need to force the carriers to be more transparent (i.e. the total cost of the subsidy phone plan must be at least equal to the cost of the phone outright plus the same amount of time on the same no-contract plan) because people sign these contracts because they are cheaper. The contract only serves to help the carrier.

    My vodafone iphone plan is not availiable at a discount when you bring your own phone but there is a "sim only" plan with a bit less data for $25/month less than my current plan that came with a free 16gb 3gs. $25/month is $600 over 2 years so I would pay $250 more in total if i bought my phone outright AND i would get 10% less call credit and 80% less data (200mb instead of 1gb)

  • Re:Wow (Score:3, Insightful)

    by HeronBlademaster (1079477) <heron@xnapid.com> on Friday November 13, 2009 @03:51AM (#30084382) Homepage

    Assuming neither sender nor recipient has a text messaging plan, yeah.

    I'm paying $30/month for unlimited texting, as I mentioned; my sister makes good use of it (~1000 outgoing, ~1000 incoming texts monthly). Figure that's the only way I'll get my money's worth.

  • Re:Wow (Score:3, Insightful)

    by HeronBlademaster (1079477) <heron@xnapid.com> on Friday November 13, 2009 @04:59AM (#30084584) Homepage

    To be fair I'm sure the SMS is compressed to about 70bytes, maybe less.

    Nah, it's sent uncompressed. It uses some free space in the command channel of the cell network (meaning it's being sent anyway, so it's literally free). They have no incentive to compress it.

    Long distance calls cost more on cellphones

    Not on any plan I've seen. AT&T, Verizon, and Sprint all include long distance at no extra charge. (I'm of course referring to domestic long distance.)

    Cellphone bills cost something like 90$/mo w/ a data plan.

    Well the easiest way to save money on cell phones is to get a family plan. I share 700 minutes between five phones, and we pay for unlimited messaging.

    My bill comes to almost exactly $150/month - that's just $30 per line including tax. That's a far better deal than getting five landlines (and long distance calling from them).

    None of us have phones that really need data, but if I get an iPhone, then I have to get an unlimited data plan for my line. (Data plans are per-line.) That means I'd pay an extra $30/month or so for unlimited data on my phone. It's easy to use that enough to make it worth the money.

    Don't get me wrong - I think cell phone companies charge way too much for non-plan text messaging, they definitely charge way too much for phone hardware, and they have a tendency toward nickel-and-diming unsuspecting customers. But if you use enough data that you need an unlimited data plan, you're not getting ripped off; and $30/month for a phone you can take anywhere and with which you can call anywhere is well worth the money.

  • by adamchou (993073) on Friday November 13, 2009 @06:01AM (#30084852)
    You say this as if there is some other cell provider to run to

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