Marketplace Scratch Pad

The FCC wants answers from Verizon

Scott Jagow Dec 4, 2009

This morning, the Federal Communications Commission sent a letter to Verizon Wireless asking the company: What’s up with doubling the penalties for switching carriers?

Last month, Verizon increased the early termination fee for smart phone customers from $150 to $350. Verizon said smart phones have become more expensive to subsidize. The company says when customers bail on their contracts, they make out pretty good because they’re getting a discount on the phone at first and then only paying $150 to get out.

But yesterday, Senator Amy Klobuchar (D-Minn) introduced a bill that would prevent wireless companies from doing this sort of thing. More from the Washington Post:

“Changing your wireless provider shouldn’t break the bank,” said Klobuchar in a release. “Forcing consumers to pay outrageous fees bearing little to no relation to the cost of their handset devices is anti-consumer and anti-competitive.”

In the bill, a wireless carrier would be prevented from charging an ETF that is higher than the discount in a cellphone that the wireless company offers consumers for entering into a multi-year contract. For example, if a wireless consumer enters into a two-year contract and receives a $150 discount with the contract, the ETF cannot exceed $150.

In no way could I be considered an apologist for mobile phone companies. On one occasion years ago, I got into a screaming match with a cell phone customer service rep. I bet they still play the recording of that call at company parties.

But it’s hard to say that people are being victimized when they are signing a contract. They know the terms of the contract at the time they are signing it. You can just buy the phone for full price and avoid the contract. If you want the discount, you have to keep the service a certain period of time or pay the price. And if you don’t think $350 is fair, switch companies. No other company has followed Verizon so far.

But the FCC is also asking Verizon to explain why customers are getting charged $1.99 for accidentally hitting the “access web” key. Now, this I have a problem with. I do that quite a bit, accidentally start the web application when I’m trying to do something else. I haven’t seen any charges, but I’m not with Verizon. One customer explained it this way to the New York Times:

“Virtually every bill I get has a couple of erroneous data charges at $1.99 each–yet we download no data.

“Here’s how it works. They configure the phones to have multiple easily hit keystrokes to launch ‘Get it now’ or ‘Mobile Web’–usually a single key like an arrow key. Often we have no idea what key we hit, but up pops one of these screens. The instant you call the function, they charge you the data fee.

I’m having flashbacks to that shouting match. Does it make your blood boil? What about the early termination fee issue?

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