There has recently been a lot of controversy regarding Verizon’s recent decision to up its early termination fees (ETFs) for advanced devices (smart phones), many of which feature a mobile web browser that provides users with Internet access and a number of online applications and entertainment options offered by the company. Among these various applications and entertainment features is a “Music” option, listed under “Entertainment and Apps” on the Verizon website. Considering the limited variety offered under Verizon’s “Music” category, one must ask if the increased early termination fee and costs for data usage make the feature worth it. I spoke about these issues with some Verizon’s consumers and was fairly surprised by some of the responses that I received.
King sized ETFs
Verizon Wireless recently announced an increase in its ETFs for smart phones. Implemented on November 15th, this new policy has increased the initial fee from $175, the current rate for normal devices, to $350 with a pro-rate of $10 per month. Even with this slight decrease in the fee over time, consumers owning smart phones will still be left with a $120 fee if they abandon their contract only one month before the termination of a two-year agreement.
Verizon claims that this increase “enables Verizon Wireless to offer wireless devices at a substantial discount from their full retail price” and “enables many more consumers, including those of limited means, access to a range of exciting, state of the art broadband services and capabilities.” They also claim that the increased rate protects Verizon from costs incurred by the company by offering this discount and compensates Verizon for the extra time spent by sales associates to assist consumers with smart phones.
Federal Communications Commissioner Mignon Clyburn, in a response to the letter submitted by Verizon explaining its rationale behind this change, stated that the company’s explanation was “unsatisfying” and “troubling.” The Commissioner was particularly concerned with the company’s argument that the increased fee would also be used for “advertising costs, commissions for sales personnel, and store costs.”
Bigger ETF = the public interest?
It is important to consider the services offered by these advanced devices, specifically with regard to the available mobile web browser function. Although many plans include an unlimited Internet option (as is the case with the Droid and the Droid Eris), phones without an Internet plan are charged $1.99 per megabyte of use. This cost applies to all consumers with no Internet plan who activate their mobile web browser regardless of the amount of data used and regardless of whether or not the activation was intentional. Verizon claims that it has extensively notified its customers, both current and prospective, so that it makes “customers aware of ETFs before a prospective customer even comes into a Verizon Wireless store, goes on-line or calls (the) toll-free sales number.”
But interviews that I had with various Verizon customers seem to damage the validity of this claim. In our discussions one consumer stated that he had been seriously considering purchasing a Droid since its initial advertisement, had visited myriad Verizon stores and kiosks, had contacted a number of sales associates, and had done extensive research about the product and available plans online. However, our conversation was the first time that he had even heard of Verizon’s new ETF policy, and he was understandably surprised.
This complaint was echoed by every other current Verizon customer that I spoke with, some of whom recently purchased the Droid, but were also completely unaware of the change in Verizon’s policy. The few individuals who were aware of the increased fee either accidentally stumbled across the information or were forced to spend a notable amount of time on the Verizon website in search of helpful sources after receiving a vague text stating that “new changes are coming to Verizon.” Each consumer that I interviewed agreed that they felt as if they were “not adequately notified of the change” and that the increased fee was “not advertised whatsoever.”
Is web browser worth the ETF?
Is the browser worth it? Although the majority of the people that I interviewed admittedly do not own an Internet plan, the general consensus seems to dictate that the answer is a strong “No.” A common complaint revolved about the issue of accidental activation of the web browser and “butt-dialing,” the accidental calling of a contact occurring as a result of an individual sitting on their phone.
Verizon claims that it protects its customers from the accidental activation of the web browser in at least three ways: by not charging customers for use of the Verizon homepage (the alleged default setting for Verizon mobile web browsers), by enabling programs in some of its phones that prevent accidental activation, and customer service to compensate customers with $1.99 for an accidental use.
But is this true? While some of the phones owned by those interviewed technically allow users to prevent accidental activation, it appears that many consumers are unaware of how to access the necessary programs. In Verizon’s defense, some of their phones prompt users with a confirmation message to launch their browser, although this trait seemed to be relatively uncommon when viewed alongside numerous complaints of accidental activation followed by multiple $1.99 charges. One of the people that I interviewed actually attempted to call Verizon’s customer service line to complain about the charge and was forced to unwillingly pay the charge after being told, “There’s nothing we can do.”
What about the additional costs associated with informing Verizon sales personnel about the company’s new ETF and advanced devices? One consumer that I spoke to has actually attempted to contact Verizon on multiple occasions for technical support for Android, the operating system of the Droid. Every time that he called Verizon or went to a Verizon store, he was referred to “Google.com” to search for a solution because each employee that he spoke to was apparently unhelpful.
Mobile web browser services
Embedded in the browser’s “Entertainment and Apps” section is the “Music” option, which allows users to “Track the latest music information including artist news, events, and music trivia from MTV, VH-1 and CMT. Chat with fans in the Music Chat Zone and purchase event tickets from Ticketmaster or Tickets Now.” How often do consumers actually take advantage of these options? It seems that many feel that the costs of accessing music-related media are too high. For example, MP3s available on the Verizon website are priced at the standard $0.99. However, ringtones and “ringback” tones cost $2.99 and $1.99 respectively. For some consumers, a micro SD card, costing roughly $10, seems like a more cost-efficient measure, allowing them to upload music from their personal collections. And some consumers seemed disappointed with the lack of musical variety being offered on the website. One person that I spoke to even stated, “No thanks. I don’t need Lady Gaga on my phone.”
So is Verizon’s increased ETF, unreliable customer support, lack of variety, and seemingly false data worth the risk and cost? Unless Verizon begins to start listening to its customers’ complaints, I think that the answer is fairly obvious.