Wireless carriers tell FCC they disclose fees

Feb 24, 2010 By JOELLE TESSLER , AP Technology Writer

(AP) -- The nation's biggest wireless carriers are telling federal regulators that they give consumers adequate notice about early termination fees that apply when a service contract is broken before it expires.

AT&T Inc., Verizon Communications Inc., Sprint Nextel Corp., T-Mobile USA Inc. and Google Inc. made their comments in letters filed with the Federal Communications Commission late Tuesday in response to an FCC inquiry into early termination fees.

The companies told the agency that such fees allow them to subsidize handset purchases - including purchases of cutting-edge smart phones - for customers. normally recover those subsidies over the life of a contract, but cannot do that when a customer breaks a contract early.

In addition, the companies said the U.S. wireless industry is highly competitive - with four national carriers and a number of smaller providers all offering many choices of plans, including prepaid and month-to-month plans with no contract and no early termination fees.

"Customers clearly understand that they have choices," wrote AT&T Senior Vice President Robert Quinn. "While the vast majority of AT&T's subscribers choose term commitments and discounted or free handsets, AT&T has millions of month-to-month and prepaid subscribers."

For plans that do include termination fees, Sprint said it provides "clear and conspicuous disclosures" before, during and after a handset sale to ensure that understand and agree to the terms of a contract. Vonya McCann, senior vice president of government affairs for Sprint, told the FCC that with so much competition among wireless carriers, Sprint has "every incentive to ensure that consumers are well-informed."

"The last thing Sprint wants is a surprised customer that is unhappy," McCann wrote. "An unsatisfied customer is much more likely to leave Sprint for another carrier."

For its part, Verizon told the FCC that it is changing the price cards displayed next to handsets in its stores to include early termination fees for each device. The company also said it has reduced the number of devices subject to its $350 early . Late last year, FCC sent a letter to Verizon Wireless asking why the company had doubled early termination fees on smart phone contracts to as much as $350 from $175.

In its response to the FCC, Google addressed the agency's questions about why customers who use Google's new Nexus One phone on the T-Mobile network must pay fees to both companies if they break a contract.

Richard Whitt, Google's Washington telecom and media counsel, explained that Google receives a commission from T-Mobile for new and upgraded wireless subscribers that it brings to T-Mobile with the Nexus One and that Google in turn passes this commission along to customers in the form of handset discount. When a customer breaks a contract before it expires, however, T-Mobile seeks a full repayment of the commission from Google and Google then passes that along to customers through an "equipment recovery fee," Whitt said.

Earlier this month, Google shaved $200 off the equipment recovery fees that apply to customers who break a two-year T-Mobile contract after a 14-day trial period and before 120 days. Google lowered the $350 fee that applied to new T-Mobile customers to $150, and it lowered the $250 fee for existing T-Mobile customers upgrading to the Nexus One to $50.

Customers would still have to pay a separate $200 early termination fee to T-Mobile to break a contract after the 14-day trial period and before 120 days. After that, the fee is prorated.

Thomas Sugrue, vice president of government affairs for T-Mobile, told the FCC that the company's early termination fees are not tied to specific equipment subsidies, but rather are intended to recover lost revenue resulting from a broken contract.

Explore further: Quantenna promises 10-gigabit Wi-Fi by next year

3 /5 (1 vote)
add to favorites email to friend print save as pdf

Related Stories

Google reduces fee to break Nexus One contract

Feb 09, 2010

(AP) -- Google Inc. is shaving $200 off the fee that it charges customers of its new Nexus One phone to break a service contract with T-Mobile, as federal regulators continue to probe such fees and the rationale for them.

FCC seeking information about wireless fees

Jan 26, 2010

(AP) -- Federal regulators are asking the nation's big wireless companies whether they give customers adequate notice about early termination fees for breaking a service contract before it expires.

FCC asks Verizon Wireless to explain fees

Dec 04, 2009

(AP) -- The Federal Communications Commission on Friday asked Verizon Wireless why it recently doubled the fees it charges customers when they break their contracts on "smart" phones.

Sprint to pay $17.5 million to settle fee suit

Aug 12, 2009

(AP) -- Sprint Nextel Corp. has agreed to pay $17.5 million to settle a lawsuit claiming the fees it has charged customers who end their wireless contracts early are illegal.

Recommended for you

Quantenna promises 10-gigabit Wi-Fi by next year

19 hours ago

(Phys.org) —Quantenna Communications has announced that it has plans for releasing a chipset that will be capable of delivering 10Gbps WiFi to/from routers, bridges and computers by sometime next year. ...

Tech giants look to skies to spread Internet

Apr 16, 2014

The shortest path to the Internet for some remote corners of the world may be through the skies. That is the message from US tech giants seeking to spread the online gospel to hard-to-reach regions.

Wireless industry makes anti-theft commitment

Apr 16, 2014

A trade group for wireless providers said Tuesday that the biggest mobile device manufacturers and carriers will soon put anti-theft tools on the gadgets to try to deter rampant smartphone theft.

Dish Network denies wrongdoing in $2M settlement

Apr 15, 2014

The state attorney general's office says Dish Network Corp. will reimburse Washington state customers about $2 million for what it calls a deceptive surcharge, but the satellite TV provider denies any wrongdoing.

Netflix's Comcast deal improves quality of video

Apr 14, 2014

Netflix's videos are streaming through Comcast's Internet service at their highest speeds in the past 17 months now that Netflix is paying for a more direct connection to Comcast's network.

User comments : 0

More news stories

Sony's PlayStation 4 sales top seven million

Sony says it has sold seven million PlayStation 4 worldwide since its launch last year and admitted it can't make them fast enough, in a welcome change of fortune for the Japanese consumer electronics giant.

Robotics goes micro-scale

(Phys.org) —The development of light-driven 'micro-robots' that can autonomously investigate and manipulate the nano-scale environment in a microscope comes a step closer, thanks to new research from the ...

Biologists help solve fungi mysteries

(Phys.org) —A new genetic analysis revealing the previously unknown biodiversity and distribution of thousands of fungi in North America might also reveal a previously underappreciated contributor to climate ...