Verizon Wireless defends ETF hike

Verizon Wireless defended its move to double its early termination fees (ETFs) on smartphones, saying the move lowers pricing barriers for consumers who want more sophisticated devices and help it recoup the higher marketing costs to sell more advanced devices.

Verizon's explanation comes in response to a query from the Federal Communications Commission (FCC). Verizon recently doubled its ETFs to $350 for smartphones and netbooks to defray the cost of deep subsidies. So a BlackBerry Storm 2 costs $200 with a two-year contract and $539 without a contract or subsidy.

"This pricing structure enables Verizon Wireless to offer wireless devices at a substantial discount from their full retail price," the carrier said in a written response to the FCC. "By reducing up-front costs to consumers, this pricing lowers the barriers to consumers to obtaining mobile broadband devices. It thus enables many more consumers, including those of more limited means, access to a range of exciting, state-of-the-art broadband services and capabilities."

Four senators, including Sen. Amy Klobuchar (D-Minn.), introduced legislation that would limit the amount that wireless carriers can charge in early termination fees (ETFs). The bill would put a cap on the ETFs based on the cost of the phone, and would require carriers to pro-rate ETFs

For more:
- see this InformationWeek article

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