Early Termination Fee (EFT) Regulation

Verizon Wireless Settles Early Termination Fee Case For $21 Million

The wireless carrier’s decision follows requests by consumers and the FCC to ease up on its EFT policies.

By W. David Gardner
InformationWeek
July 10, 2008 02:56 PM

A push by consumers and the FCC to pressure cell phone service providers to ease their early termination fee (EFT) policies gained more ground this week when Verizon (NYSE: VZ) Wireless agreed to pay $21 million to settle a lawsuit in California.Verizon and other wireless carriers had stonewalled on the issue, but then last October AT&T broke ranks and began relaxing its termination fee rules. AT&T and Verizon Wireless, a partnership of Verizon Communications and Vodafone, are the two largest cell phone providers in the U.S.

More Telecom Insights

White Papers

• Web 2.0 in the Enterprise
• VoIP–Voice Over Internet Protocol

Webcasts

• How Can Financial Firms Build a Better Data Center?

Reports

• Smaller Business UC Hurdles: User Adoption, Policies
• IT Survival Guide

Alan Plutzik, an attorney for Verizon Wireless and other service providers‘ customers, told the Associated Press that the settlement involved the recovery of cash, although he said details of the settlement still have to be worked out with Verizon and approved by a judge presiding over the litigation.Last month, the FCC focused attention on the thorny problem of early termination fees as Commission Chairman Kevin Martin said he favored a nationwide resolution of termination fees. He also suggested that termination fees more accurately track the actual cost of phones given to consumers — a $50 phone would call for a lower termination fee than a $250 phone, for instance. Verizon favors a national approach to the issue, echoing Martin who favors the prorating of fees and avoiding a patchwork of state lawsuits.

Verizon, which didn’t admit any wrongdoing in the California action, said the settlement clears up various multiple claims, according to published reports.

In testimony before the FCC last month, Plutzik cited a case involving Sprint (NYSE: S) and said there is evidence that about 2 million Sprint subscribers paid or were charged early termination fees (EFTs) between July 1999 and March 2007.

“Extrapolating from that figure,” Plutzik said, “the number of cell phone customers of all carriers in the country as a whole who paid or were charged an ETF may be as high as forty to fifty million people. And that does not even include the millions of Americans who did not pay and were charged an EFT but were forced to put up with bad service, overcharges or unfair treatment because they were unable or unwilling to incur an EFT.”

A final decision hasn’t been issued in California courts in the Sprint case. In June, T-Mobile announced it would prorate its EFT charges.

All major service providers have been reviewing and revising their EFT policies in recent months.

Bundle Phone TV Wireless Internet

FCC Chairman Outlines Plan for Early Termination Fee (ETF) Regulation

News by Michael Oryl on Friday June 13, 2008. 

Yesterday FCC Chairman Kevin Martin outlined a possible plan for regulating carrier ETFs (early termination fees). Martin said that while he see federal cooperation with state authorities as a requirement, he felt that a “patchwork” of 50 different sets of regulations and the current trend of class action suits was not the best course of action for protecting consumers.

While he did not say that the FCC was going to claim jurisdiction in this matter, he hinted that it was a possibility. His outline for ETF regulation had 5 main points.

1. ETFs should be linked to the cost of the phone (though we believe he meant the amount of the carrier subsidy put towards the final price of the phone).
2. ETFs should be prorated over the life of the contract term (Verizon and AT&T already do this).
3. Any contract should be for a “reasonable” length of time (the chairman failed to clarify).
4. Contract renewals should not cause the ETF to be extended (we assume he means if no new subsidized phone is purchased or received by the consumer).
5. Consumers should have until after they receive their first bill to cancel new service without being forced to pay an ETF of any sort.

Chairman Martin said that he believes ETFs are a legitimate way to recoup legitimate expenses (carrier subsidies), but that he fears they are also being used to inhibit a consumer’s right to choose and ability to move to a new company for service when dissatisfied.

Chairman Martin’s statement, as well as those of the other commissioners and those that testified, can be read at the FCC website.

About the author

Michael Oryl
Michael is the Philadelphia based owner and editor-in-chief of MobileBurn.com. He also operates several other tech sites, including AndroidAuthority.com.

Advertisement

<a href=’http://www.mobileburn.com/phpAdsNew-2.0/adclick.php?n=ad3a0ad1′ target=’_blank’><img src=’http://www.mobileburn.com/phpAdsNew-2.0/adview.php?what=zone:20&n=ad3a0ad1′ border=’0′ alt=”></a>

Advertisement

if (!window.netshel_ord) { netshel_ord=Math.random()*10000000000000000;
}
if (!window.netshel_tile) { netshel_tile=1; }
document.write(‘<script language=”JavaScript” src=”http://ad.doubleclick.net/adj/ns.mobileburn/general;kw=null,null;sz=120×600,160×600;dcopt=ist;tile=’+netshel_tile+’;ord=’ + netshel_ord + ‘?” type=”text/javascript”></scr’ + ‘ipt>’);
netshel_tile++;
&lt;a href=”http://ad.doubleclick.net/click%3Bh=v8/3734/3/0/%2a/k%3B206110811%3B0-0%3B0%3B16777042%3B2321-160/600%3B27539472/27557351/1%3B%3B%7Esscs%3D%3fhttp://clk.atdmt.com/M0N/go/106644767/direct;wi.160;hi.600/01/” target=”_blank”&gt;&lt;img src=”http://view.atdmt.com/M0N/view/106644767/direct;wi.160;hi.600/01/”/&gt;&lt;/a&gt;&lt;noscript&gt;&lt;a href=”http://ad.doubleclick.net/click%3Bh=v8/3734/3/0/%2a/k%3B206110811%3B0-0%3B0%3B16777042%3B2321-160/600%3B27539472/27557351/1%3B%3B%7Esscs%3D%3fhttp://clk.atdmt.com/M0N/go/106644767/direct;wi.160;hi.600/01/” target=”_blank”&gt;&lt;img border=”0″ src=”http://view.atdmt.com/M0N/view/106644767/direct;wi.160;hi.600/01/” /&gt;&lt;/a&gt;&lt;/noscript&gt;

Related Stories

CLOSE

DIRECTV HD TV digital high definition

How Much Does DIRECTV Cost?

Installation: Free in up to 4 rooms

You can have DIRECTV service in 1, 2, 3, and up to 4 rooms of your home…all with FREE standard installation. Your first receiver is free and you pay a lease fee of only $4.99/month for the second and each additional receiver.

If you want to record, pause and rewind live TV, then you’ll want a DIRECTV DVR. You can upgrade to a DVR receiver for FREE.

DIRECTV Programming Costs

Monthly programming costs are determined by the DIRECTV programming package that you select:

ACN Digital Phone Service With Free Iris 3000 Videophone

Connect with others like never before!

Call anyone, anytime, anywhere in the U.S., Canada and Puerto Rico for a low monthly price, saving you big over the cost of traditional calling. ACN Digital Phone Service utilizes your broadband Internet connection to channel telephone calls and includes features not offered with traditional service such as virtual numbers, enhanced voice mail and online account management. Plus, you can keep your current number. And if you make frequent international calls, ACN offers several international plans to help you save.

The Latest in Video Technology! NEW ACN IRIS 3000^TM Videophone

Add an ACN IRIS 3000^TM Videophone to your ACN Digital Phone Service account. ACN Video Phones are as easy to use as traditional phones, but a lot more fun! Our newest phone provides a crystal clear high resolution picture on a large, 7” screen. This phone also features an enhanced phone book, so you can manage your contacts and the ability to upload a picture. Leaving a message or greeting for someone is better with the IRIS 3000, with Video Mail which can you be viewed on your video phone or from any computer around the world! You can even digitally-enable your entire home through with ACN’s new accessories – Digital Cordless Phones and Video Home Links.

When not in use, the ACN IRIS 3000^TM Videophone is a photo frame showcasing your latest pictures.

Official Websites ACNinc MyACN ACNintegrity

ACN – World’s Largest Direct Seller of Telecommunication Services

About ACN

Founded in 1993 by four entrepreneurs: Greg Provenzano, Robert Stevanovski, Mike Cupisz and Tony Cupisz, ACN has grown into the world’s largest direct selling telecommunications company. ACN now operates in 19 countries spanning North America, Europe, Australia and New Zealand.

Products & Services

ACN products include cutting-edge services like Digital Phone Service with Video Phone which operates on ACN’s state-of-the-art network, as well as essential services like Local and Long Distance, Internet services, Wireless and Satellite TV with ACN DIRECTV.

ACN Opportunity

ACN provides value and choice to consumers while also providing Independent Representatives with an opportunity to form their own home-based businesses. Whatever your dream might be, whether it’s more time with family, more financial security, or simply more fun, ACN can help you achieve it.

ACN Digital Video Phone Service

http://www.acninc.com

What do Tupperware and telephone service have in common? For ACN, it’s all in how you sell it. The telecommunications reseller makes its money through multi-level marketing (the selling strategy used by the likes of consumer goods distributors Tupperware Brands and Amway). Its commission-based independent distributors operate in 19 countries, reselling local and long-distance phone service, as well as DSL Internet access. ACN purchases network resources from such leading carriers as BellSouth, Telstra, and Verizon. Chairman Robert Stevanovski, president Gregory Provenzano, and vice presidents Anthony and Michael Cupisz founded ACN in 1993.