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FCC Adds AT&T, Sprint, Google, & T-Mobile to ETF Inquiry

caution_tapeWe mentioned awhile back that the FCC had made a formal request to Verizon about their ETF standards and their new Advanced Devices double ETF. Now Reuters is reporting that the FCC has expanded its net to include AT&T, Sprint, T-Mobile, & Google in the inquiry. They are asking questions as to how the ETF is determined and applied.

As Engadget points out: If even the FCC cannot understand how carriers calculate their ETF’s how can normal consumers be expected to understand. I personally just explain it as an arbitrary penalty that carriers put on customers not to break their contracts. There is no rhyme or reason to calculate it but it just needs to be sufficient enough to deter most customers from cancelling.

via FCC (PDF)

6 total comments on this postSubmit your comment!
  1. this is silly, imo.

    consumers have LOTS of choices in this matter; the most obvious being to buy the phone outright and get M2M service. i’m no fan of corporate empires, but if one chooses to take advantage of the introductory price on a device, they should be willing to meet all of the terms of the agreement or pay the termination fee. in many cases, the subsidized price plus ETF is usually less than the retail price of the device. this is why Verizon upped their ETF on smartphones.

    however, i do NOT agree with t-mobile’s ETF policy on the Nexus One… since they’re not subsidizing the price of the phone (google does), they have no right to charge an ETF, especially on top of google’s $350 subsidy recovery fee.

    every time i read about or overhear someone complaining about paying an ETF relating to anything other than unresolved network issues, i cant help but wonder why their parents raised them that way.

    • I agree that there is a reason for patents but the reason needs to actually be believable. For example if the carrier is arguing that they need the ETF to reclaim the subsidy they give you on the phone then it is rediculous to charge the same ETF for the 8310 and the 9700. Its also totally arbitrary between carriers. Is Verizon subsidizing $350 of the 8330 while Sprint is only subsidizing $175? No they just made up an arbitrary random number to deter people from breaking contracts. Now if the contracts are just to deter people from changing carriers… The FCC has some say in that matter.

  2. To me, the ETF has always been justification for the carrier to offer me a $500 phone for less than $200. You only pay the ETF if you breach your contract, and the price you pay for the phone plus the ETF seldom equal the unactivated cost of the phone. I don’t agree with a standard ETF on all phones, and since the ETF period is not model specific, I think the ETF should be directly proportional to the unactivated cost of the phone. Considering how much money the carrier loses when a new phone is purchased, they need some level of guarantee that you will stay around long enough for them to recoop those costs.

    I suppose we could just abolish ETFs and contracts, and just buy phones directly from the manufacturer, but I would much prefer to keep the ETFs…

  3. Whatever! Them damn phones don’t cost $500! Them phones are mass produced at a fraction of the cost that phone companies charge us. How do you think they pay for all the fancy stores, commercials, and hype? They overcharge us for the phones. And then they nickle and dime us with there so called “nation wide” plans. Its all bullsh*% to me. I’m glad the FTC is investigating. Its about time someone or organization took a closer look at there tactics. So for those that say they would rather keep the ETFs… I would ask you… What the fu*k are you smoking???

    • Most carriers change their fees quite often, and when the fees change on your monthly bill, this is a violation of the Terms and Conditions, letting you port to another carrier or cancel your service without an ETF. The ETFs don’t bother me because I have never actually paid one, so they save me money upfront on my handhelds. Also, while the phones dno’t cost $500 to manufacture, RIM sells them to the carrier and 3rd party retailers for quite a profit. It’s no big secret that carriers lose money on most new phone sales, they just compensate with the so called nickel and dime charges and bloated monthly plans. This is commercialism…manufacturer makes a product, marks the cost up and sells to the distributor (carrier), they mark it up and sell to the end user. Because of the discounts, the carrier sells the phone to the end user at a price lower than what they paid the manufacturer for it. If we lose the ETFs, the phone prices are going to skyrocket unless we simultaneously convince the manufacturers to suddenly hate money and lower their prices…

      Like I said, I would prefer to keep the ETFs.

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