Verizon Wireless today responded to an FCC letter of inquiry as to the carrier’s ETF policy, as well as how it charges its customers for accessing Verizon mobile Web.
Just yesterday, Verizon applied for and was granted an extension on its response to the FCC’s inquiry. Verizon was given until Tuesday, Dec. 22, but apparently didn’t need the extra time. Today’s response came in the form of a 77-page document.
The FCC’s inquiry was sparked in part by Verizon’s doubling of early termination fees (ETF) on its “Advanced Devices” from $175 to $350. ETFs for Verizon’s more basic devices remained at $175. The commission also wanted to know how Verizon charges customers who mistakenly access the mobile Web on their handsets.
Verizon explained the increase in its ETFs for advanced devices by invoking nearly every step of the sale, from buying the device wholesale to increased customer service costs the carrier incurs on devices with more advanced features.
“In addition to the difference between the purchase and selling prices of devices, Verizon
Wireless incurs additional costs to sign up customers, such as advertising costs, commissions for sales personnel and store costs. These costs are higher for Advanced Devices: for example, it takes more time (and hence increases the cost to Verizon Wireless) for sales and customer care representatives to handle customer inquiries regarding the complex advanced features and functionalities of Advanced Devices,” wrote Verizon.
Verizon claims investments in its network are driving up ETFs. “Verizon Wireless also makes significant ongoing investments in its broadband networks and services that support Advanced Devices. Significant ongoing investments in its broadband networks and services that support Advanced Devices. These substantial costs, as well as other related operating costs, are put at risk when customers fail to fulfill a contractual term to which they agreed when they signed up for service and received an Advanced Device at a heavily discounted price.”
The FCC notes that ETFs on Verizon’s advanced devices are pro-rated, decreasing by $10 per month. The commission noted that this still leaves a $120 ETF if a customer cancels after 23 months of two-year contract.
Verizon sidesteps the question, stating that the majority of those who terminate their contracts early, do so in the first 12 months.
“Verizon Wireless estimates that, at the twelve month point in the contract term, its typical loss from the early termination is more than double the applicable remaining ETF amount for an Advanced Device ($230),” the document states, adding that “customers as a whole would be worse off if Verizon Wireless were to take this approach because early terminations occur disproportionately in the early part of the contract term and relatively few customers terminate near the end of the contract term.”
Additionally, Verizon’s response addressed concerns that customers who accidentally accessed Verizon’s Mobile Web were being charged $1.99 for their mistake.
Verizon says it charges per megabyte of data usage and that it does not charge users that open the Mobile Web and land on Verizon’s mobile home page.
“Usage fees for Verizon Wireless’ mobile Internet service, Mobile Web, apply
when a customer launches the Internet browser and then navigates away from the default Mobile Web homepage to sites other than a Verizon Wireless customer care site (e.g., My Verizon, the online customer account portal). Usage fees are not charged when a customer simply launches the Internet browser and lands on the Verizon Wireless Mobile Web homepage, which is the default setting,” Verizon said.
In its initial letter of inquiry, the FCC cited an article that claimed Verizon’s handsets were designed to facilitate the mistake on the customers’ part. Verizon says that’s inaccurate, adding that the home Web key on most handsets is front-and-center because it is frequently used. The response also noted that customer service is able to reverse any data charges that are mistakenly accrued.
Filed Under: Industry regulations
