Verizon Wireless settles its early termination fee suits

The carrier has sued by several consumers nationwide over its early termination fees. While VZW admits no wrongdoing, this week's payout settles those cases.

A total of $21 million would be split among the plaintiffs and cover attorney's fees. In addition, it would cap the amount that Verizon Wireless would have to pay to settle individual early termination fee (ETF) claims.

US Federal Communications Commission officials held hearings in June on the subject after receiving thousands of complaints. Chairman Kevin Martin proposed several changes, including variable ETF fees based on handset cost, prorated penalties, and the banning of extensions if a contract is renewed.

The agency is still discussing Chairman Martin's proposal, and it did not comment on the VZW decision. It was not immediately clear whether the needed majority of commissioners would support the chairman in order to move his ideas forward.

In its own testimony at the June hearing, VZW appeared to support efforts to reform the system which seems to be furthered by its moves to settle with complainants here. It also said the suits were a distraction, and the cash settlement was a quick way to resolve it.

Sprint Nextel may be the next to settle, as it is awaiting a decision in California over its own ETF suit. Verizon Wireless' apparent desire to settle quickly, coupled with the fact that both these companies have stood in front of the same judge in one case already, may indicate that there is little confidence in a positive judgment for the wireless industry.

However, Sprint seems confident in its position, noting that a jury had found that the company had lost three times as much as it had forced users to pay in ETFs, rendering a cash settlement, in its opinion, unlikely.