U.S. Carriers And Google Respond To FCC Inquiry On Early Termination Fees


T-Mobile, Sprint (NYSE: S), AT&T (NYSE: T), Verizon, and Google (NSDQ: GOOG) have responded to a federal inquiry that is investigating fees charged when consumers leave their contracts early.

While the answers are laid out in reams of paper, Engadget has reviewed the documents to glean the highlights. They say each company has a different philosophy: T-Mobile believes a single $200 ETF (early termination fee) is the way to go unless customers opt for a plan that has no contract; Sprint is continuing to evaluate the market with regard to a multiple ETF setup; Google notes it recently dropped its $350 Equipment Recovery Fee to $150; Verizon reasons that it had to raise its ETF recently because smartphones are getting more expensive; and AT&T says if consumers don’t like it, they can always opt for a prepaid plan with no ties.

The obvious company that is not like the others here is Google. It’s been included in the inquiry because of its early termination fee in conjunction with the Nexus One, which it is selling either on its own or with a T-Mobile contract. Engadget says the company gets a bit snippy for being lumped in with carriers, and claims that the recent EFT price reduction was not in reaction to the FCC’s inquiry — although the timing of it suggests that. The documents reveal for the first time, the reason behind the fee — it isn’t intended as a revenue stream, but rather, as a way to recoup the losses Google incurs when T-Mobile asks for its commission back if a customer cancels within 120 days. T-Mobile doesn’t mention this in its response to the FCC.

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