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Verizon's will reportedly bump ETF's by $350 on new "advanced device" contracts.  (Source: Boy Genius Report)
Join the nation's largest and most reliable wireless... but don't leave or you'll pay!

Halloween may be over, but this news is downright scary.  For those considering to jump ship from Verizon and grab an AT&T iPhone (assuming Verizon doesn't get it), you may soon be paying more -- much more.

Verizon may be keeping customers happy with its Buy-One-Get-One sale on Blackberries, including the new Blackberry Storm 2, but some new terms are likely to make customers not so happy. 

Verizon had been noticing that some customers had been using the promotion to snag some extra cash, getting an extra line with a Blackberry Tour or Storm 2, then selling it on eBay after paying the $175 termination fee, in the end pocketing about $100 or more in cash.  An unhappy Verizon has decided to punish all its customers and will be rolling out increased early termination fees, in a move reportedly confirmed by Boy Genius Report.

The wireless carrier will bump ETFs to $350 for new smart phone 1 year and 2 year contracts.  To soften the blow, Verizon plans to drop this amount by $10 a month, but that's still substantially more at the year mark (previously $175 or less, now $230).  Verizon still has yet to specify a full list of models the term "advanced devices" covers (the term used in the ETF hike info sheet), but we're guessing it includes the Blackberry Tour, Storm 2, and Droid phones, at least.

The new terms will be reportedly rolled out to new customers starting November 15.  Incidentally, that's a mere week and a half after the new Android 2.0 Droid phone hits on November 6.  So Verizon customers might want to act fast if they're planning to go Android -- as a short wait could end up costing them.

Comments     Threshold


Disappointing
By mandrews on 11/4/2009 10:08:58 AM , Rating: 2
I was considering purchasing a Droid phone, but this news makes me a bit more wary.




RE: Disappointing
By Zshazz on 11/4/2009 10:33:05 AM , Rating: 4
I don't know... it seems pretty clear why they did it. They're simply closing a little loop hole that allowed people to make money at Verizon's cost.

Don't blame Verizon for what a few people were doing to make a quick buck.


RE: Disappointing
By fleshconsumed on 11/4/09, Rating: -1
RE: Disappointing
By bhieb on 11/4/2009 11:05:47 AM , Rating: 5
How does paying full price ~$400 for the smart phone help the customer? No one is stopping you from buying a full price phone and not being "tied" to a carrier.

If, however, you want Verizon to foot the bill then expect to stay in contract or pay up.


RE: Disappointing
By fleshconsumed on 11/4/2009 11:14:29 AM , Rating: 2
You mean smaller monthly bill doesn't help customer and no contract/unlocked phones do not spur more competition? Really?


RE: Disappointing
By bhieb on 11/4/2009 11:37:45 AM , Rating: 3
Depends on how small the bill is. Does it off set the much larger cost of the phone? If the phone is normally $400 and subsidized down to cost us $100, then you'd expect bills ~$12.50/month cheaper over 2 years.

So there is no benefit to the customer, unless your saying that somehow you expect the savings to be higher it is a wash over the contract.

Now certainly there are phones that you cannot get unlocked (iPhone, Pre), but there are plenty you can pay retail for and get on a pay per month plan with any carrier you'd like (aka the unsubsidized way you want). However this will almost always cost you MORE not less, a contracted customer is usually going to get a better deal.


RE: Disappointing
By Alexstarfire on 11/4/2009 4:28:39 PM , Rating: 2
Of course getting an unsubsidized phone in the US is going to cost more. You end up paying for the phone twice essentially. However, if you look at Metro PCS you can see what the monthly prices could be if phones weren't subsidized. Seems to me unsubsidized phones would be a far better option. It means customers could actually purchase phones the cell providers don't offer without having to pay an arm and a leg for it.

Also, I've never seen anything subsidized for $300. $200 -$250 seems pretty average for a 2 year contract, with some being less than that. And considering what you'd need for a smartphone I don't think getting a $10 cheaper monthly plan overall is out of the question.

But yea, the way things are set up now in the US the contracted customer will always get a better deal, but that's not how it works in most other countries.


RE: Disappointing
By mcnabney on 11/4/2009 7:38:58 PM , Rating: 2
The actual price of the Droid is $550.

$200 after rebate price + $350 ETF = $550

The reasoning is that you are getting a voice subsidy of $175 and a data subsidy of $175 for the same device. You get a $550 device for $200 in exchange for having voice and data service for a 24 months.


RE: Disappointing
By Alexstarfire on 11/4/2009 8:06:30 PM , Rating: 2
Congrats, you found 1 phone that applies to.


RE: Disappointing
By mcnabney on 11/4/2009 8:54:22 PM , Rating: 2
And this is the phone which is causing the change. It appears that Verizon is switching to a bulk-data service model. They will sell the data package for an extra $30/month - but now you get the videos, turn-by-turn navigation, and push email included. It actually makes sense for the consumer and it represents a fundamental control transfer away from the wireless provider. I think that Verizon can get away with this change more easily than other providers since they have a network that provides both performance and reliability.


RE: Disappointing
By Alexstarfire on 11/5/2009 2:56:35 AM , Rating: 2
If you end up paying more for the same stuff I don't see how that benefits the consumer. Metro PCS obviously doesn't have any problems with the way they sell their stuff.


RE: Disappointing
By MeesterNid on 11/4/09, Rating: 0
RE: Disappointing
By CSMR on 11/4/2009 12:35:50 PM , Rating: 2
It helps the consumer by opening up markets and creating extra competition. Instead of the natural division of markets (contract, phone, loan) you pay for complex bundlings of the above. If you make sure the markets are split up as above then they can be very competitive since each one competes in the price of a single product and you have fewer products (the natural number).

And stupid people are not disadvantaged by this because you can still sell bundles of these things if that's simpler, which will cost (with competition) exactly the price you could get them individually.


RE: Disappointing
By CSMR on 11/4/2009 12:40:35 PM , Rating: 2
It also increases transparency because the stated prices will be real prices of a real object. Just look at the confusions of tech sites who say "such and such a phone costs $100" when of course there are relatively contractual obligations omitted. With a logically set-up market you can say "a phone costs x" and that's it. And that means costs are comprehensible and comparable.


RE: Disappointing
By mikeyD95125 on 11/4/2009 8:02:40 PM , Rating: 1
I think it is sad that most people don't even know the "retail price" of their phone. If they did then maybe I wouldn't see so many people who treat their phones like shit. I would be in favor of more wide spread unsubsidized phones. I think if enough people bought phones without a contract the price would drop enough that I would end up paying less then having it subsidized.


RE: Disappointing
By jmunjr on 11/5/2009 2:55:52 AM , Rating: 2
If I want an iPhone I can't buy one a regular price and pick my carrier...so yeah Apple and AT&T is preventing me.


RE: Disappointing
By ebakke on 11/4/2009 12:08:59 PM , Rating: 2
quote:
Closing loophole would have been getting rid of subsidized phones. But of course no carrier would do that...
Ooops, those damn facts again!
http://www.t-mobile.com/shop/plans/Cell-Phone-Plan...


RE: Disappointing
By Alexstarfire on 11/4/2009 4:44:00 PM , Rating: 1
What facts are those? That you can get plans with no contract? You can do that on most services. The problem isn't the contract it's the monthly payments. I can look at those prices and tell you that they are set up to pay for the phone. 500 minutes for $29.99? Really?

Look at the plans at Metro PCS and tell me it's the same. http://www.metropcs.com/plans/default.aspx#


RE: Disappointing
By ebakke on 11/6/2009 9:45:57 AM , Rating: 2
You said carriers wouldn't get rid of subsidized phones. I provided you with a link to T-Mobile's rate plans that are discounted and do not include subsidized phones. So then you started talking about contracts, and monthly prices...


RE: Disappointing
By mckinney on 11/5/2009 9:25:30 AM , Rating: 2
I think it makes more sense to not offer the 2 for 1...


RE: Disappointing
By FITCamaro on 11/4/2009 10:45:19 AM , Rating: 5
I have no problem with it. Don't like it, don't sign up. Pure and simple. People who b*tch about this are retarded. You have a choice.

Me personally, I am very happy with Verizon's service so I have no problems signing a 2 year contract. If that changes, when my contract runs out, I won't sign back up.


RE: Disappointing
By meepstone on 11/4/2009 10:58:58 AM , Rating: 1
i'm sure that the people that sign up and decide to cancel early dont plan on it. So they never plan on paying that high fee.


RE: Disappointing
By bhieb on 11/4/2009 11:11:30 AM , Rating: 5
You may not plan on loosing your income and not being able to pay for, say, your car/house either, but your under contract and there are penalties (repo/forclosure being the most drastic).

In the end it is your obligation to live up to the contract or DON'T F*ING sign it. The entitlement mentality of the average consumer these days is such bullsh*t.


RE: Disappointing
By Roffles on 11/4/2009 12:25:28 PM , Rating: 3
I find your opinion in complete alignment with my own. A lot of consumers are scammers, rotten to the core, and the rest of us pay for it.


RE: Disappointing
By bdot on 11/4/2009 12:54:32 PM , Rating: 2
3 cheers for personal responsibility!


RE: Disappointing
By Alexstarfire on 11/4/2009 4:58:36 PM , Rating: 2
No offense cause I'm the same way as you, but a phone isn't comparable to a house or car. People don't borrow money from a bank to pay for it. My point is that there isn't really any need for a contract.


RE: Disappointing
By spwrozek on 11/4/2009 11:04:07 AM , Rating: 2
I am glad someone was willing to say this. You signed a contract, you need to honor it. If you don't want a contract go somewhere else.


RE: Disappointing
By FITCamaro on 11/4/2009 11:19:30 AM , Rating: 2
Always first to throw myself under the bus. ;)


RE: Disappointing
By Motoman on 11/4/2009 11:08:56 AM , Rating: 2
Yes. And this obviously also applies to people who buy Apple and/or AT&T products and then bitch about them later. Don't buy the effing thing.


RE: Disappointing
By 3minence on 11/4/2009 12:19:49 PM , Rating: 1
Yes and no. If you sign up for a two year contract and GET THE SERVICE expected, then you have no grounds to bitch.

If you buy a product for a certain level of service then don't get it, you should be able to break the contract with minimal penalty. For example, didn't ATT start to take down G2 antennas and replace them with G3 antennas? As a result people with older G2 only phones started having service problems. I would argue that if you bought a G2 phone with a certain service level, then the company begins to provide less service for the same price, you should be able to pay less money or drop the contract completely.


RE: Disappointing
By mcnabney on 11/4/2009 7:45:53 PM , Rating: 2
Yes. All providers have a 30 day trial period that they can return the device and void their contract.


RE: Disappointing
By Titanius on 11/4/2009 11:14:25 AM , Rating: 2
Big deal, $350 is nothing. Here in Canada, we pay upwards of $750 to get our of a contract prematurely.


RE: Disappointing
By bdot on 11/4/2009 12:53:04 PM , Rating: 2
Who still charges $750? I thought everyone was capped at $400 voice and then the additional $100 on data devices.


RE: Disappointing
By Titanius on 11/4/2009 8:01:45 PM , Rating: 2
That might be what it is now, I don't know...where did you get those numbers from anyways? But about a month ago I had someone tell me about Telus asking that much to get out of a contract for USB 3G Internet access, and a few months ago a friend of mine asked Rogers how much would he have to pay to get out of his contract and that was around $750...he luckily found someone to sign his contract over too to get out of it.


What's with the AT&T hating and Verizon love
By corduroygt on 11/4/2009 10:42:14 AM , Rating: 2
Verizon and AT&T really aren't better than each other. VZ might have a little better coverage, but AT&T works just fine for me, and I can use my phone pretty much anywhere in the world, since they use the standard GSM technology like the 95% of the rest of the world, not CDMA like VZ.

The only good thing Verizon has is FIOS and it's only available in few areas anyway.




RE: What's with the AT&T hating and Verizon love
By acase on 11/4/2009 11:23:00 AM , Rating: 2
Well, the way I see it...since ATT got the Iphone it flooded their network and their egos at the same time and they have begun to think like Apple. I say, it should only be right that they end up with as slim of a percentage of marketshare as apple does in the computer world.


By corduroygt on 11/4/2009 12:38:28 PM , Rating: 2
I'm sure they wouldnt mind Apple's slim PC marketshare if they also had the profit margins to go along with it.
Come to think of it, AT&T was the only logical choice for Apple, it's the largest GSM carrier in the US, and GSM is dominant all around the world, so they could sell it in other countries without any more engineering costs.


RE: What's with the AT&T hating and Verizon love
By Bateluer on 11/4/2009 11:56:48 AM , Rating: 2
Err, a little better coverage? Isn't VZW's 3G coverage something like 75-80% more than AT&T?


By ReblTeen84 on 11/4/2009 12:38:38 PM , Rating: 2
Sure, but AT&T users/lovers are never going to admit that. For the record, i've had VZ for the last 7 years and have no intention of going away from them. Hell, I wind up with a new 2 year contract every year coz I keep getting new phones!


By Alexstarfire on 11/4/2009 5:09:11 PM , Rating: 2
Why do people assume 3G coverage when someone just says coverage? He never mentioned 3G once.


RE: What's with the AT&T hating and Verizon love
By barich on 11/4/2009 6:04:00 PM , Rating: 2
Their coverage in general is pretty terrible, too. There are entire counties around here that have no AT&T coverage whatsoever. These are rural areas, granted, but if you have a GSM phone, in those counties you simply have no service. In many cases, Verizon has full EVDO Rev. A available in the same areas.

Also, there are many anecdotal reports of people having problems with AT&T even with good signal. I can't recall ever placing a call and having it not go through the first time on Verizon, but it sounds like it's a relatively common occurence on AT&T in metro areas.


By Alexstarfire on 11/4/2009 8:15:57 PM , Rating: 2
Some of that isn't due to coverage though. Towers can be overloaded and calls are then unable to go through. I personally have only had this happen perhaps a handful of times in the decade or so we've had AT&T/cingular. I imagine congestion occurs mostly in large cities, of which I don't live in. I live in suburbia. Can say I've never had that happen when I've been in downtown Atlanta though. They just need to put up more towers and stop being bastards trying to milk people for money. The whole reason to get profits is to advance yourself, of which they really aren't doing. If you're not doing that then you may as well not get profits.

Can't say much about general coverage in rural areas, but it seems to me that providing service to the 100 people or so in some rural counties just isn't worth it, especially for 3G service. Not saying it's right, but I don't expect coverage literally EVERYWHERE. The ocean, middle of lake Eerie (and every other Great Lake for that matter), tops of a couple mountains, and probably most of Alaska are places where you just don't need it. Not that it wouldn't be nice, but there is really no incentive for anyone to do so, with technology the way it is now.

Only place I've had trouble with AT&T is at my house, but to be fair EVERYONE has trouble in my area. That's Sprint, T-mobile, AT&T, Verizon, and Metro PCS. That's all the ones my friends have had over the years. The service works just fine most of the time, like 3-4 bars, but you can put your phone next to some items and drop to 0-1 bar easily. Even then it usually works just fine.


Sanity check...
By Motoman on 11/4/2009 11:12:48 AM , Rating: 1
...while $350 is probably out of line, and I wouldn't defend it...ETFs exist, as far as I can tell, to ensure that the carrier doesn't eat the subsidy they're giving you on the phone you bought.

Say you buy the kPhone - it's two letters better than the iPhone! - and the carrier subsidizes the cost of that phone for you by $200. Hence, you start off having spent $200 less than you normally would have. The carrier has factored that $200 into the life of the contract you signed, such that they're accounting for that $200 over 24 months, or whatever. When you terminate early, if the carrier had no ETF, the consumer would be screwing the carrier on the subsidy.

In a perfect world, the subsidy and ETF would be equal on day 1 of the contract, and prorate down as time goes on. But in principle there is nothing wrong at all with ETFs as a concept.

If you don't like them, buy your phone at full retail price and then you have no such worries. And no subsidy.




RE: Sanity check...
By Diesel Donkey on 11/4/2009 11:33:09 AM , Rating: 2
I don't take issue with the idea of the ETF itself, but I do take issue with how it's implemented. Clearly if the carrier subsidizes your phone they're going to have to recoup at least part of that cost through contract payments. An ETF is needed to replace the contract payments if the contract is broken.

However, if I buy a phone at full price and bring it to the carrier, my monthly bill is not reduced in any way to compensate for the fact that I'm not paying off a subsidy. So, I'm effectively still repaying the subsidy I never got if I stay on for two years. Perhaps I'm missing something here, but it seems to me that if I don't go the subsidized route I'm paying for the phone twice.

In light of that, I think that people who stay on contract beyond two years without upgrading their phone are essentially paying for a phone that they're not getting.


RE: Sanity check...
By ctodd on 11/4/2009 12:20:58 PM , Rating: 2
quote:
However, if I buy a phone at full price and bring it to the carrier, my monthly bill is not reduced in any way to compensate for the fact that I'm not paying off a subsidy.


Or you can look at it this way, you are paying extra not to have a contract. Since you have your own phone, there would be no contract requirements; therefore, no ETF.

I think it is all fair. If the table was turned, I would do the same thing.


RE: Sanity check...
By Motoman on 11/4/2009 3:56:45 PM , Rating: 2
While I think a reasonable request could be made to have a lowered monthly rate, I think your opinion here is pretty good. It may very well be worth it to people to be an at-will customer of your mobile carrier. The instant they do something you don't like, you can just quit.


RE: Sanity check...
By Diesel Donkey on 11/4/2009 6:13:37 PM , Rating: 2
That is an interesting way to look at it, but as I see it, if I've purchased the phone at full price then I've effectively paid the ETF already. So, bringing my own phone carries the same cost as breaking the contract, except I'm still paying for the phone through the contract. Thus, a customer who brings their own phone and then stays with the carrier for two years pays the same amount as a customer that gets a subsidized phone and then immediately breaks the contract. There is no benefit at all to buying a phone for full price because you'll end up paying the same amount as subsidized price + ETF. I mean

total cost = full price = subsidized price + ETF

Furthermore, if you bring your own phone to the carrier AND stay for two years, you end up paying

total cost = full price + ETF = subsidized price + 2*ETF

So, the benefit of bringing your own phone to the carrier and staying for two years is that you effectively have to pay the ETF twice. What a privilege! You get screwed if you bring in your own phone and then don't leave immediately. Any time you spend with the carrier you are paying extra because the off-contract rates are not discounted. Unless you KNOW that you are going to break contract early, it is monetarily unfavorable to bring in your own phone. I guess the carrier wins either way, which doesn't seem completely fair to me.


RE: Sanity check...
By steve1014 on 11/4/2009 6:23:01 PM , Rating: 2
in this situation consumers were better off to buy and set up 2 lines and get the phones and break the contract. if they would have just bought the phone without a contract it would've cost more. hence why verizon is making the change.

Consumers can't catch a break in this cell phone market.


This again?
By mydogfarted on 11/4/2009 10:34:55 AM , Rating: 3
Didn't the wireless carriers just get smacked on the nose for their ridiculously high early termination fees?




RE: This again?
By FITCamaro on 11/4/2009 10:47:23 AM , Rating: 3
They shouldn't considering you're signing a contract. You have the choice not to agree to it. Don't sign it if you don't like it.


RE: This again?
By bdot on 11/4/2009 10:47:49 AM , Rating: 2
In Canada carriers charge $20 a month up to $400 and most now have an additional "Data Contract" fee of $100. This $230 seems mild to our $500 early termination charges.


Another way to fleece a cat..
By Stuka on 11/4/2009 11:01:29 AM , Rating: 3
When I bought my T-Mobile phone through Amazon for $0.01, I was warned that if I cancelled or lowered my service, I would have to pay the full retail price of the phone. I'm pretty sure this would be in addition to the ETF. Seems like that's a better way to do it; recoup the cost of the phone from the person with the phone, not the guy with the Motorola brick.




edit...
By SlipDizzy on 11/4/2009 10:03:49 AM , Rating: 2
quote:
Join the world's most nation's largest and most reliable wireless... but don't leave or you'll pay!


This doesn't make sense.... What is a world's most nation's largest?




Is it just me?
By steve1014 on 11/4/2009 5:30:11 PM , Rating: 2
Am I the only one who wants to go get a free Blackberry from Verizon right now?

I'm sorry but phone companies stick it to consumers every single day. I feel like they should have been more careful when putting together this marketing campaign that didn't make good economic sense with the contracts that BOTH sides agreed to. They agreed that if i give them $175 I can cancel the contract and keep the phone. I don't see a problem if I'm willing to pay the agreed upon fees.

**let the flaming begin**




By bluemanta on 11/4/2009 9:01:31 PM , Rating: 2
You have to ways to obtain the device:

1. Pay the retail price for unlocked device
2. Pay reduced-to-zero price when you commit to a contract.

Obviously when you commit to a contract, someone has to pay for the device. In this case it is the carrier.

So... who should pay for the device if you break the contract?




Simple
By Dingmatt on 11/6/2009 7:28:06 AM , Rating: 2
In the UK its easy, to cancel your contract you need to pay the remaining balance in full.

For example if i had a Iphone contract at £40($66)pm for 18 months I'd have to pay close to £720($1195) to cancel it.

You should all be glad your phone companies haven't adopted the same policy.




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