[cenloe]

Seems there is quite a bit of confusion about why the FCC is questioning Verizon about the raised ETF rates. Yes we all agree that there is a valid reason for having an ETF in place and it seems to benefit us as we get a lower upfront price on a new device. Here is my thinking on the subject.
This is a problem to the FCC because they want to know why the ETF will still be so high when only one month is left.
Verizon says that the ETF is to recoup the cost of the subsidized device should a customer decide to cancel the contract, and we all agree that's a valid reason. The FCC thinks that the cost of the device should be prorated as an ETF in each of the 24 months of the contract.
If you were to pay $200 for a $500 device, $300 should be the cost of the ETF starting with the first month because that's the amount they subsidize. It should decrease by $12.50 (300/24) for each completed month of the contract, according to the FCC's thinking because, once again, Verizon says that what the ETF is for. If the ETF is $350 it should be prorated at $14.583 per completed month as opposed to $10 which still leaves $120 with just one month to go. Seems like a valid question.
Please keep this thread respectful and courteous.

Posted from my CrackBerry at wapforums.crackberry.com

[Super_Mario]

That no makes sense, because at the end of the 2 years, you pay nothing. And you are still not obligated to get the contract. It's not like VZW raised the ETF on existing customers. Its for new lines of service or upgrades. If you don't like it, don't get the phone.

[Gawain]

Actually, a $120 ETF at month 23 is less than some monthly bills...just sayin'.

Posted from my CrackBerry at wapforums.crackberry.com

[gotblackberry]

Seems there is quite a bit of confusion about why the FCC is questioning Verizon about the raised ETF rates. Yes we all agree that there is a valid reason for having an ETF in place and it seems to benefit us as we get a lower upfront price on a new device. Here is my thinking on the subject.
This is a problem to the FCC because they want to know why the ETF will still be so high when only one month is left.
Verizon says that the ETF is to recoup the cost of the subsidized device should a customer decide to cancel the contract, and we all agree that's a valid reason. The FCC thinks that the cost of the device should be prorated as an ETF in each of the 24 months of the contract.
If you were to pay $200 for a $500 device, $300 should be the cost of the ETF starting with the first month because that's the amount they subsidize. It should decrease by $12.50 (300/24) for each completed month of the contract, according to the FCC's thinking because, once again, Verizon says that what the ETF is for. If the ETF is $350 it should be prorated at $14.583 per completed month as opposed to $10 which still leaves $120 with just one month to go. Seems like a valid question.
Please keep this thread respectful and courteous.

Posted from my CrackBerry at wapforums.crackberry.com

Why should the government tell a business what "should" be done? Where the **** does it get this authority? Why can't a PRIVATE company make PRIVATE decisions? What happens when they come into your business and say, "You can't charge that."

[cenloe]

Why should the government tell a business what "should" be done? Where the **** does it get this authority? Why can't a PRIVATE company make PRIVATE decisions? What happens when they come into your business and say, "You can't charge that."

First of all, I don't have a problem with the ETF. I won't change carriers so it really doesn't concern me.
Every business is subject to government oversight. I seem to remember the Progressive Party in the early part of last century bring about change concerning consumers and the less than desirable practices of big business. Someone has to be the business police, besides they have already proven that they cannot police themselves.
According to your logic, private businesses can do what the heck they want without any oversight whatsoever and that's just ludicrous.
The problem the FCC has with Verizon is that they say they are charging for a specific reason, but yet their math doesn't add up. I don't believe the FCC has a real problem with Verizon charging a higher ETF but they do have a problem with it not making $ sense.

Posted from my CrackBerry at wapforums.crackberry.com

[silenttt123]

I would tend to agree with the FCC. If the sole purpose of the ETF is to recoup the losses, then make it $0 after the contract is up. Otherwise, it just shows the ETF is there for more than just to recoup losses.

Posted from my CrackBerry at wapforums.crackberry.com

[EKhatch]

Your idea is nice but the logic behind it is flawed. Who's to say the price of the phone goes down each month you get further into your contract? Your monthly bill doesn't have a built in percentage that goes towards paying for the phone. If it did then monthly plans would be different for those that have different phones. The fee is the same every month because the price between what you paid for the phone w/contract remains the same as if you bought it outright, at least until the phone gets really old/outdated.

Maybe I am just to tired to think right now. I wish your idea made sense because I would love to agree but right now it just doesn't.

[jburris020]

Do to how popular some phones are the manufactorer's may not make a newer device to replace the older one and the value may hold the same. I know it isn't a smart phone, but take the Voyager for example the phone was being sold of about 2 years and the only thing that LG changed was the color of the phone once midway through. Verizon deducts $10 per completed month off of a $350 ETF, and $5 a month off of a $175 ETF. So as stated in previous posts if the phone does not lose any value (Voyager) and the FCC required the ETF to be dropped due to the value of the phone, then Verizon in some cases would end up on the losing end having subsidized the phone in the beginning and then losing again in the end.

Hopefully that makes sense, it's very early and I have not had any coffee yet...makes sense in my mind but that isn't say too much

[Jim from NW Pa]

Weekend bum- socialism at its finest.

First of all, I don't have a problem with the ETF. I won't change carriers so it really doesn't concern me.
Every business is subject to government oversight. I seem to remember the Progressive Party in the early part of last century bring about change concerning consumers and the less than desirable practices of big business. Someone has to be the business police, besides they have already proven that they cannot police themselves.
According to your logic, private businesses can do what the heck they want without any oversight whatsoever and that's just ludicrous.
The problem the FCC has with Verizon is that they say they are charging for a specific reason, but yet their math doesn't add up. I don't believe the FCC has a real problem with Verizon charging a higher ETF but they do have a problem with it not making $ sense.

Posted from my CrackBerry at wapforums.crackberry.com

And to you, sir... Its not ludacris its free market capitalism. Hate to tell everyone, but we are on our way down the road to Marxist communism.

Posted from my CrackBerry at wapforums.crackberry.com

[pkcable]

So far folks are being civil, lets keep it that way. Big brother is watching and he's got a mod stick. (just remembering what happened in the LAST thread like this)

[xdre]

Weekend bum- socialism at its finest.

That's not even close to socialism. It's simply managed capitalism, same as it's been for decades now. In fact, the only thing even partly socialist is VZW and the rest using public airwaves for private profit.

And to you, sir... Its not ludacris its free market capitalism.

If it was free market capitalism, getting a phone on contract would result in a higher monthly bill than for month-to-month users, and the ETF would decrease monthly by the equivalent of the payoff amount for the phone, and the monthly bill would go down some amount at the end of the contract. Instead, what's really happening is that the month-to-month users are subsidizing everyone with no benefit to themselves, and the people who are on contract face outsized ETFs throughout the middle and near the end of the contract's life. There's no give-and-take in that.

I dont' see ETFs going away (and I'm not advocating that, either), but I hope the FCC requires the wireless carriers to make them more reasonable and logical.

[Super_Mario]

I would tend to agree with the FCC. If the sole purpose of the ETF is to recoup the losses, then make it $0 after the contract is up. Otherwise, it just shows the ETF is there for more than just to recoup losses.

Posted from my CrackBerry at wapforums.crackberry.com

It does go to zero after the contract is over. Even now with the 175.00 ETF the lowest it can be tiered is 60.00 after the contract is up, 0.00. There is NOT a termination fee if you completed your contract.

[jahoobob]

IMO the FCC doesn't have the authority to delve into a companies trade practices. This has nothing to do with communications but does have a lot to do with trade. Thus, if any agency should be questioning Verizon it should be the FTC. This is a result of some ignorant senator from the great white north going to the wrong commission when she is just trying to make points with voters.
From the FCC Website:

The FCC was established by the Communications Act of 1934 and is charged with regulating interstate and international communications by radio, television, wire, satellite and cable

from the FTC website:

When the FTC was created in 1914, its purpose was to prevent unfair methods of competition in commerce as part of the battle to “bust the trusts.” Over the years, Congress passed additional laws giving the agency greater authority to police anticompetitive practices. In 1938, Congress passed a broad prohibition against “unfair and deceptive acts or practices.”

Verizon should just tell the FCC to F off as it is none of their business.
On the other hand the FTC could not be told that as they have the jurisdiction.

[gotblackberry]

First of all, I don't have a problem with the ETF. I won't change carriers so it really doesn't concern me.
Every business is subject to government oversight. I seem to remember the Progressive Party in the early part of last century bring about change concerning consumers and the less than desirable practices of big business. Someone has to be the business police, besides they have already proven that they cannot police themselves.
According to your logic, private businesses can do what the heck they want without any oversight whatsoever and that's just ludicrous.
The problem the FCC has with Verizon is that they say they are charging for a specific reason, but yet their math doesn't add up. I don't believe the FCC has a real problem with Verizon charging a higher ETF but they do have a problem with it not making $ sense.

Posted from my CrackBerry at wapforums.crackberry.com

I didn't mean to really direct that to o you. Just at the premise in general. Verizon, or any private company, shouldn't have to explain anything they do to the government. That's why we have private business. They are allowed to run their business as they choose, if the market doesn't like it the company will fail.

Posted from my CrackBerry at wapforums.crackberry.com

[gotblackberry]

That's not even close to socialism. It's simply managed capitalism, same as it's been for decades now. In fact, the only thing even partly socialist is VZW and the rest using public airwaves for private profit.

Does Verizon not purchase the spectrum?

If it was free market capitalism, getting a phone on contract would result in a higher monthly bill than for month-to-month users, and the ETF would decrease monthly by the equivalent of the payoff amount for the phone, and the monthly bill would go down some amount at the end of the contract. Instead, what's really happening is that the month-to-month users are subsidizing everyone with no benefit to themselves, and the people who are on contract face outsized ETFs throughout the middle and near the end of the contract's life. There's no give-and-take in that.

I dont' see ETFs going away (and I'm not advocating that, either), but I hope the FCC requires the wireless carriers to make them more reasonable and logical.

No, free market capatalism means that the company can make the etf go down $6.77 per month then on odd month go down by $5.00. They can do as they wish. If you don't agree to the terms, don't sign the agreement.

Posted from my CrackBerry at wapforums.crackberry.com

[cenloe]

Does Verizon not purchase the spectrum?



No, free market capatalism means that the company can make the etf go down $6.77 per month then on odd month go down by $5.00. They can do as they wish. If you don't agree to the terms, don't sign the agreement.

Posted from my CrackBerry at wapforums.crackberry.com

No one, not an individual or a business is allowed to get away with predatory and anti-competitive practices. The FCC and the FTC were created because the consumer wanted oversight from such abuses, they are just doing the job that we the people wanted them to do.

[paimon.soror]

Why should the government tell a business what "should" be done? Where the **** does it get this authority? Why can't a PRIVATE company make PRIVATE decisions? What happens when they come into your business and say, "You can't charge that."

Simple, to protect consumers.

Albiet private, you are a US based company. You file patents through the government, pay checks through the government, and your business relies on the stock market which is influenced by the government...... in others words, your owned by the government. Make private decisions all you want, but dont expect the main source of your existance back you

[xdre]

Does Verizon not purchase the spectrum?

No, just the rights to use it. There are some restrictions, of course, and one of them is that they agree to be subject to the FCC on how they use said spectrum.

No, free market capatalism means that the company can make the etf go down $6.77 per month then on odd month go down by $5.00.

Actually, no. The company and the consumer have to mutually agree for it to be free market capitalism. If the company can arbitrarily set the ETF regardless of what the customer thinks, then there is an imbalance. If you'll recall, the only reason why the ETF isn't $175 for the length of the contract is because the FCC indicated they were going to investigate and suddenly the wireless providers all changed their tune.

They can do as they wish. If you don't agree to the terms, don't sign the agreement.

The problem is that the wireless provider is dictating the terms. Businesses don't get to ram unsatisfactory terms down the consumer's throat and say "take it or leave it". That's not and never will be a free market. In fact, that's one of the hallmarks of a monopoly (or oligopoly in this case).

[gotblackberry]

No one, not an individual or a business is allowed to get away with predatory and anti-competitive practices. The FCC and the FTC were created because the consumer wanted oversight from such abuses, they are just doing the job that we the people wanted them to do.

How is a $350 ETF predatory or anti-competitive?

Simple, to protect consumers.

Albiet private, you are a US based company. You file patents through the government, pay checks through the government, and your business relies on the stock market which is influenced by the government...... in others words, your owned by the government. Make private decisions all you want, but dont expect the main source of your existance back you

Um, Verizon Wireless is not publicly traded. How is the stock market influenced by the government? Companies choose whether or not they want ot be publicly traded, the only reason why we do checks through the government is because they TAX companies and Verizon files patents to protect it's rights to certain things. Your argument doesn't really make sense.

No, just the rights to use it. There are some restrictions, of course, and one of them is that they agree to be subject to the FCC on how they use said spectrum.

Right, how they use the spectrum but it doesn't dictate their billing terms, does it?

Actually, no. The company and the consumer have to mutually agree for it to be free market capitalism. If the company can arbitrarily set the ETF regardless of what the customer thinks, then there is an imbalance. If you'll recall, the only reason why the ETF isn't $175 for the length of the contract is because the FCC indicated they were going to investigate and suddenly the wireless providers all changed their tune.

The company and the consumer do mutually agree when they agree to the contract. The wireless company is not saying, "Take this phone, you MUST HAVE IT. You must sign for this and accept a contract." You can choose another carrier or you can pay full retail or you can have a non-pda phone.

The problem is that the wireless provider is dictating the terms. Businesses don't get to ram unsatisfactory terms down the consumer's throat and say "take it or leave it". That's not and never will be a free market. In fact, that's one of the hallmarks of a monopoly (or oligopoly in this case).

When there are three other major companies you can pick from, it's not "ramming" anything.

[cenloe]

How is a $350 ETF predatory or anti-competitive?

The FCC will let you know. Look, it's safe to say we disagree. I'm glad the FCC is investigating this, reform is long overdue.

[jlsparks]

Does Verizon not purchase the spectrum?



No, free market capatalism means that the company can make the etf go down $6.77 per month then on odd month go down by $5.00. They can do as they wish. If you don't agree to the terms, don't sign the agreement.

Posted from my CrackBerry at wapforums.crackberry.com

No, Verizon did not purchase the spectrum. They leased it from the US public, which is who owns the spectrum. Leases are managed by the government to maximize income to the Treasury. Fail #1.

Regulation is not "marxist socialism" or whatever outrageous nonsense was spewed earlier in this thread. I'm about tired of folks *now* expressing outrage, disgust, and spewing absurd monographs. Take a look at the FCC's recent history. Going back to at least 2006, and likely earlier (I stopped searching their site (fcc.gov) at 2006, they were expressing concern - industry-wide - about ETF practices. As I recall we had a Compassionate Conservative running the ship and appointing the FCC Commissioners in 2006, right? Sorry that the facts don't comport with your political views, but they are what they are.

Finally, if someone signs up for a smartphone they're doing so presumably with eyes wide open - in other words they have been explained and provided with the T&C. If they sign on that little electronic pad they're committing themselves to following the T&C. If they break the contract that breach should result in a monetary loss from the breaching party, like any other contract. ETFs are fine. Know what you're signing before you sign, and if you don't like it, go somewhere else for your service. But for the love of god, can we leave politics out it for a change?

[xdre]

How is a $350 ETF predatory or anti-competitive?

Excessive lock-in. An ETF is supposed to be merely the penalty for breaking the contract, not a means of keeping the customer in the contract for the entire length against their wishes.

Right, how they use the spectrum but it doesn't dictate their billing terms, does it?

It does, actually.

The company and the consumer do mutually agree when they agree to the contract.

The customer agrees because if he/she wants that phone there is very little alternative. That's not quite the same thing.

The wireless company is not saying, "Take this phone, you MUST HAVE IT. You must sign for this and accept a contract." You can choose another carrier or you can pay full retail or you can have a non-pda phone.

See above. It's all well and good to blame the consumer for signing the contract, but you're absolving the company for tilting the contract heavily in favor of itself, and that's not right nor particularly free market.

When there are three other major companies you can pick from, it's not "ramming" anything.

It is when the other three companies generally follow suit. There's a reason why all of them were up until very recently charging almost exactly the same price for the same billing plan, and competition wasn't it.

[Super_Mario]

Excessive lock-in. An ETF is supposed to be merely the penalty for breaking the contract, not a means of keeping the customer in the contract for the entire length against their wishes.



It does, actually.



The customer agrees because if he/she wants that phone there is very little alternative. That's not quite the same thing.



See above. It's all well and good to blame the consumer for signing the contract, but you're absolving the company for tilting the contract heavily in favor of itself, and that's not right nor particularly free market.



It is when the other three companies generally follow suit. There's a reason why all of them were up until very recently charging almost exactly the same price for the same billing plan, and competition wasn't it.

This actually makes the most sense of any other of the posts regarding this issue.

[tgilmore16]

This actually makes the most sense of any other of the posts regarding this issue.

If you are going to buy a smartphone for $179.00 and get a plan for say $99.00 / month, then $350.00 should not be an issue. If the $350.00 is too much, perhaps the need of a smartphone should be reevaluated.

The consumer has choices. One is don't get a smartphone and the other is use a different carrier. I don't feel the carrier is ramming a fee down the consumer's throat when the consumer can pick a different phone. Choose responsibly and honor your contracts.

[cenloe]

Update: Verizons response to the FCC

Verizon to FCC: hey, you said ETFs were okay! -- Engadget


Even though the FCC just gave Verizon until Monday to respond to its inquiries regarding the company's new $350 "advanced device" early termination fee, they've shown some hustle here and delivered their 77 (yes, seventy-seven) page response today. Here are the two big takeaways consumers are going to care about:
The company justifies the advanced device ETF a couple ways; it starts out by referring to some 2003 statements by the FCC in which the Commission says that it doesn't support the concept of customers breaking contracts and that carriers have a right to recoup those fees. Of course, that really doesn't drive to the point here, which is that Verizon's now charging two completely different ETFs based on a rather arbitrary line in the sand drawn by Verizon; to that end, the carrier says that the additional cost it incurs to procure the devices on its advanced list is greater than the difference between the two ETFs ($175) on average. It also says that it needs that extra guaranteed revenue to keep its broadband network up to snuff, since advanced devices are more likely to strain it.
Regarding the weirdness at the end of the contract -- where a customer still owes $120 23 months into a two-year deal -- Verizon says that it's still losing money (read: we should be thankful they're prorating at all). As an example, it says that its average loss for a customer canceling 12 months into a contract is about double the $230 prorated ETF on an advanced device, and that statistically speaking, customers are far more likely to cancel early on than late. While we don't doubt that, we think they're trying to divert the conversation here just a bit.
It's hard to say whether these responses are going to sate the FCC on the matter, but seeing how Verizon's showing no signs that it's interesting in changing its policies, this could still turn into a battle royale. Stay tuned -- something tells us this isn't the last we'll hear on the matter.

http://fjallfoss.fcc.gov/ecfs/docume...?id=7020353621

Warning, This document is 77 pages long.