Erizon Wireless doubles early termination fee:

Starting Nov. 15, Verizon plans to double its early termination fee (ETF) -- to $350 -- for customers who end their cellphone contracts early. The fee, arriving just in time for the holidays, applies to customers who have a smart phone or other advanced device on a one or two year contract.
The penalty will decrease by $10 for each month of service completed. If a customer completes five months of service, the penalty would be reduced to $300, for example.
The fee, the highest ever imposed by a major carrier, “is insane,” says Joel Kelsey of Consumers Union, the USA’s largest consumer group. “There’s no justification” for a fee that high, he says. “It’s punitive to customers who decide to leave Verizon early.”

Not so says Verizon. “This has to do with the cost we pay for the device,” says spokesman Jim Gerace. Verizon customers, he notes, can buy a subsidized Blackberry for as little as $99. What Verizon pays to Blackberry-maker Research In Motion, however, “is far north of that,” he says.

The wireless industry has long subsidized devices to hold down retail costs, then charged customers a penalty if they exited their contracts early. The standard ETF is currently around $175 to $200. It was established years ago, when expensive smart phones, netbooks and other advanced devices didn’t exist, Gerace says.

Gerace says ETFs on other Verizon wireless devices, such as standard cellphones, won’t change. The current ETF is $175, and it decreases by $5 a month for each month of the contract’s term that is completed.
Kelsey says he’s unimpressed. “ETFs are already too high,” he says. “This ($350 fee) is absolutely ridiculous."
Update: Gerace contacted us to point out that all Verizon phones, including smart devices, are available without a contract at a full, unsubsidized, price. But be prepared to pay up. Example: The Blackberry Storm 2. Verizon sells it for $179 with a two year contract and, soon, a $350 ETF. Or you can pay full retail -- $539 -- with no contract or ETF.


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