The FCC sent letters to the four Tier 1 wireless carriers as well as Google, asking them to explain in detail their early termination fee (ETF) policies for handsets. The probe, as part of the commission's larger truth-in-billing inquiry, comes as carrier ETF policies have fallen under greater scrutiny, particularly at Verizon Wireless.
The commission sent letters to AT&T Mobility, Sprint Nextel, T-Mobile USA, Verizon and Google, and asked them to explain how ETFs are assessed and the rationale behind them. The inclusion of Google is particularly interesting since Google has long sought to separate its mobile efforts such as Google Voice from that of traditional carriers. However, by selling its Nexus One smartphone through its online store, and coupling it was a $350 equipment recovery fee (in addition to a $200 T-Mobile ETF), the FCC said Google was in effect issuing an ETF.
In its letter to Google, the FCC said it welcomed more choices for consumers to obtain mobile devices. "At the same time, where new options may subject consumers to substantial ETFs, potentially from more than one entity, the commission has a special interest in ensuring that consumers have a clear and complete understanding of the rates, terms, and conditions on which the communications services are being offered and the rationale for those rates, terms, and conditions," the FCC said.
Wireless carriers have defended ETFs as a measure that allows them to provide the newest handsets to customers as a subsidized cost. They also have repeatedly noted that customers can choose to purchase phones at the full retail price to avoid ETFs. Operators have also been pro-rating ETFs, so that they decrease over time.
The FCC's action follows an inquiry the agency launched late last year into Verizon Wireless' new $350 ETF for smartphones and netbooks--double what it is for other devices. In responses to the FCC, the carrier has defended the practice, though it recently dropped eight devices from its list of gadgets that carry a $350 ETF.
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