As we mentioned last week
, starting November 15 Verizon will be doubling the early termination fee for smartphones from $175 to $350. The move is aimed largely at preventing people from turning around and making a profit on devices like the new Motorola Droid on eBay, but also to well, make money. Calling the move "anti-consumer and anti-competitive," Minnesota Democratic Senator Amy Klobuchar has written a letter to Verizon executives
and the FCC complaining of the shift. From her letter to Verizon
Although Verizon Wireless will pro-rate the ETF by $10 a month, under the company’s new plan, the penalty for leaving the contact halfway through a two-year contract would be $230 – still higher than the $175 ETF Verizon Wireless previously charged for these phones. I remain concerned that ETFs – especially at these high prices – unfairly penalize consumers, bear little to no relationship to the cost of the handset device, and are anti-consumer and anti-competitive.
It's an interesting time for Verizon's decision, given the FCC is currently poking around anti-competitive behavior in the wireless industry
, exploring whether long-term exclusive handset deals or ETFs are used as anti-competitive weapons. Klobuchar previously introduced the Cell Phone Consumer Empowerment Act, which aimed to reduce and pro-rate ETFs.
Verizon, like Sprint, T-Mobile and AT&T, has been hounded by class action and State Attorneys General lawsuits
over their ETFs. To derail new regulation like Klocuhar's potential law, carriers ultimately changed their stripes, pro-rating their ETFs, introducing 30 day money back guarantee refund windows for consumers, and stopping the rather obnoxious practice of quietly extending a user's long-term contract every time a user made even a small change to their plan. Verizon's since wiggled away
from some of these improvements.