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The FCC has just sent letters inquiring about Early Termination Fees to each of the major wireless carriers in the United States\u00a0\u2014\u00a0AT&T, Sprint Nextel, T-Mobile, and Verizon Wireless \u2014\u00a0and one outlier: Google. We’ve embedded all five letters below. The inquiry is the first action taken by the FCC’s recently formed Consumer Task Force. The inquiry comes only a few weeks after the FCC questioned<\/a> Verizon about its high $350 ETF for “advanced devices” and deemed Verizon’s response to be “unsatisfying, and, in some cases, troubling”.<\/p>\nThe text of the letters to each of the carriers is very similar, explaining that the FCC is looking to ensure that customers are being fully and transparently informed about any ETFs they may face. But the letter to Google includes some interesting passages explaining why the company is being questioned alongside the carriers:<\/p>\n
\n\nGoogle\u2019s introduction of the Nexus One handset presents consumers with new
\noptions for obtaining mobile wireless service, from a new entrant in the wireless phone
\nmarket. The Commission welcomes new choices for consumers and new entry into the
\nmarket because it recognizes that robust competition benefits consumers by
\naccommodating the wide variety of consumers\u2019 communications needs.
\nAt the same time, where new options may subject consumers to substantial ETFs,
\npotentially from more than one entity, the Commission has a special interest in ensuring
\nthat consumers have a clear and complete understanding of the rates, terms, and
\nconditions on which the communications services are being offered and the rationale for
\nthose rates, terms, and conditions. The combination of ETFs from Google and T-Mobile
\nfor the Nexus One is also unique among the four major national carriers. Consumers
\nhave been surprised by this policy and by its financial impact. Please let us know your
\nrationale(s) for these combined fees, and whether you have coordinated or will coordinate
\non these fees and on the disclosure of their combined effect.<\/p>\n<\/blockquote>\nWhile the explanations for why each company is being questioned vary, it appears that the questions being asked are identical. Here are the twelve questions each company is being asked:<\/p>\n
\n1.\tDo your ETFs apply to all service plans or only some? If so, which ones?
\n2. What is the amount of the ETF for each service plan where ETFs apply? If there are different ETFs for different plans, what is the rationale for those differences?
\n3.\tHow much of a discount on handset purchase is given in return for a consumer accepting an ETF? Does the amount of the discount differ by device, and if so, how?
\n4. Does the ETF itself vary by device (e.g., higher ETFs for advanced devices)? If higher ETFs apply to a certain class of devices, exactly how is that class defined?
\n5.\tIs it possible for consumers to buy a handset from you at full price to avoid an ETF? If this is possible, can consumers buy unsubsidized handsets online, as well as at brick-and-mortar stores?
\n6.\tDo monthly service rates and terms differ: (1) between customers who assume a term commitment and accept an ETF, and those who don\u2019t, and (2) between customers who purchase an unsubsidized device (either from your company or a third party), and those who purchase a subsidized device? If so, how do they differ, and what is the rationale for the difference?\tCan customers easily determine the impacts of their decisions and their rates and terms?
\n7.\tAre ETFs prorated so that the customer\u2019s liability decreases over time? If so, what is the exact schedule by which they are prorated?
\n8.\tIf a customer renews his or her contract without buying a new handset, does his or her monthly service fee change in any way?
\n9.\tHow long is the trial period during which consumers can cancel their service without an ETF penalty? If they cancel, can they return the handset? If they return it, will they receive a full refund, no refund, or a refund minus a restocking and\/or refurbishing fee?
\n10. When do consumers receive their first bill under your service plans? How does the trial period relate, if at all, to receipt of the first bill?
\n11. Are there consumer fees or charges in addition to ETFs if consumers buy handsets and\/or service plans from online phone dealers, such as Amazon, LetsTalk, and Simplexity (d\/b\/a Wirefly), or from a service provider, if a customer does not complete the contract term? If so, what are they, and what are their levels, terms, and conditions? Do the fees or charges affect the ETFs and if so, how?
\n12. Press reports and public statements from wireless companies have attributed ETFs to several different factors. What is the rationale for your ETF(s), and how specifically do the structure and level of those ETF(s) relate to that rationale?\n<\/p>\n<\/blockquote>\nDA-10-133A1<\/a> \t<\/p>\n
DA-10-132A1<\/a> <\/p>\n
DA-10-137A1<\/a> <\/p>\n
DA-10-135A1<\/a> <\/p>\n