|reply to LightS |
Re: Verizon post-paid price drop?
I keep seeing folks post this, and I'm not sure they know what ETF means. It means "Early Termination Fee". Obviously, if you don't terminate early (before your contract term is completed), you don't pay the ETF.
Therefore, the cost of the subsidy was recovered by the carrier through the cost of the service plan over 24 months. They didn't magically lose the $350-450 break they gave you on the phone.
That being said, one can argue that carriers aren't actually paying "full retail" for the phone (ie. I want to buy a new phone without subsidy and I am charged $649, the carrier is probably paying far less for the device), and one would probably be correct. But even if they are only subsidizing $200-$250, they are still making that money back.
At any rate, yes, the ETF protects the carriers investment in a handset subsidy should someone choose to end their service before the end of the contract period. This is why there are graduated ETF scales depending on how many months of the contract you have fulfilled. However, the cost of actually making the subsidy back IS by all means rolled into the cost of monthly postpaid service plan. This is why you don't have to pay an ETF if you fulfill your contract.
Not that I think Verizon or anyone else is really going to give anyone a break on the cost of the service plan if they buy their own handsets, but if the cost of recovering the subsidy isn't baked into the monthly service price, where exactly is it coming from?