On Friday afternoon, Verizon Wireless issued its response to the FCC complaint which investigated the carrier’s increased early termination fees for advanced devices and the spurious charges some customers incur when accidentally accessing the Mobile Web. As expected, Verizon defended the increased ETF and dismissed the accusation that it charges customers $1.99 for accidentally connecting to the Mobile Web. Verizon justifies its increased ETF by claiming that the fee is not limited to the recovery of the wholesale purchase price of the device. The fee is also necessary to partially offset the cost of running a smartphone network. There is a cost to sell the device (advertising, commission, store costs, device subsidy), a cost to technically support the device, and a cost associated with maintaining a broadband network. Verizon also reminds the FCC that the number of advanced devices is increasing and “the overall cost to the company for providing and supporting devices to customers at low up-front cost has increased substantially”. When asked why a person canceling in the 23rd month of a 24 month contract still has to pay a $120 ETF, Verizon responded by claiming that it “still incurs a financial loss from early terminations, even with the $350 ETF”. If the ETF was prorated to$0 at the end of the contract, Verizon would be forced to charge a higher starting ETF and customers would be worse off. When you consider what Verizon has said about its need to increase its ETF, also consider the fact that Verizon’s revenue from its data services grew to $4.1 billion in Q3 2009, up 48.1 percent and up 28.9percent on a pro forma basis. In the midst of all this talk about expenses, Verizon conveniently left that information out. Now that we have seen what Verizon thinks about its ETF, let’s examine what it said about its erroneous $1.99 Mobile web charges. Hit the jump for all the details.
Rather than admit any culpability for the numerous reports of erroneous Mobile Web data charges, Verizon denied that any error exists. Repeatedly in the report, Verizon stated that they do not charge usage fees ” when a customer simply launches the Internet browser and lands on the Verizon Wireless Mobile Web homepage”. Usage fees of $1.99 per megabyte are only charged when a customer navigates away from this launch page. Verizon explained that phones can be programmed to prevent the accidental launch of the web browser and confirmed that customers can place a data block on their account. Unfortunately, Verizon’s explanation does not jibe with the numerous reports of incorrect Mobile Web charges from both Verizon Wireless customers and Verizon Wireless employees. The FCC is currently reviewing Verizon’s response, let’s hope they are thorough.
