FCC inquiry into Google, T-Mobile early termination fees for Nexus One, among others

In the last weeks of 2009, the Federal Communications Commission began a probe into Verizon Wireless' hiked early termination fees for "advanced wireless devices." The FCC was not exactly satisfied by Verizon Wireless' explanation of the fees, and said its inquiry would continue.

Today, the next stage of the investigation into early termination fees has begun. The FCC has extended to the questioning to T-Mobile, Sprint Nextel, AT&T, and Google in addition to Verizon Wireless, and the charge is now being led by the FCC's new Consumer Task Force.

FCC Chairman Julius Genachowski said today, "This inquiry is the first action by the FCC's Consumer Task Force, which was launched last week to tackle these kinds of issues. I look forward to reviewing the responses to the letters and the recommendations from staff regarding next steps."

All of the wireless providers were asked a similar set of questions: Which plans do your ETFs apply to? How much are they and what determines their price? How much are handsets discounted and is it possible to buy devices unlocked to avoid ETFs? Are ETFs prorated, and if so, in what way? How does your customer billing schedule work, and do customers have a "trial period" where they can cancel their plans without punishment?

Since Google isn't a wireless provider, it was asked a different set of questions, mostly centering around the Nexus one and its "surprising" combination of early termination fees from both Google and T-Mobile.

The letter said, "The combination of ETFs from Google and T-Mobile
for the Nexus One is also unique among the four major national carriers. Consumers have been surprised by this policy and by its financial impact. Please let us know your rationale(s) for these combined fees, and whether you have coordinated or will coordinate on these fees and on the disclosure of their combined effect."

But combined early termination fees are not unique to Google. If you buy a new device from Amazon.com's wireless section, you could also be subject to compound fees.

Excerpt taken from Amazon's Terms and Conditions:

Note, should you cancel your service with the carrier within 181 days, you may also be subject to an additional fee in accordance with the AmazonWireless Instant Discount Terms and Conditions. When you purchase your device with service from AmazonWireless.com, we automatically pass along an instant discount from the carrier to you. This discount has been provided to you based on your agreement to activate a new, or extend an existing, line of service for this device with the carrier, and (b) maintain this service in good standing for a minimum of 181 consecutive days. If you do not activate or extend a line of service in connection with this device, or if your service is canceled/disconnected before 181 consecutive days, AmazonWireless.com will charge you $250 per device, plus applicable taxes.

Betanews spoke to FCC Consumer Bureau Chief Joel Gurin this afternoon to ask if this had been taken into consideration, and if other retailers could be subject to an inquiry from the bureau.

Gurin said the Bureau is not going to extend its inquiry into other mobile retailers this time around, but the possibility has not been ruled out.

"The ETF on the Nexus One is of specific interest to us because if a subscriber cancels between 14-120 days into his contract, the ETF is $550," Gurin said. Indeed, the fine is significantly higher than what you might pay to a single carrier because it's going to both Google and T-Mobile. "This ETF is unusually high, and we want to understand the rationale behind it," Gurin said.

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