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Reform groups urge FCC to continue its investigation of Verizon ETFs

Free Press, Consumers Union, and the Media Access Project wrote a letter to the FCC this week urging the Commission to continue its investigation of Verizon Wireless’ increased early termination fees (ETFs) for smartphones and numerous consumer complaints about the company’s treatment of data usage. The letter argues that, in its answer to an inquiry by the Wireless Telecommunications and Consumer & Government Affairs Bureaus, Verizon failed to “respond adequately” to any of the questions posed, “contradicted prevailing evidence”, and possibly attempted to “mislead the Commission in its ongoing investigations of consumer disclosure and competition in wireless services.” Specifically, the letter targets Verizon’s motivation behind the increased ETF, the calculations behind the new ETF, accidental data usage by customers, and how information regarding these issues has been disclosed to consumers.

Verizon claims that the difference between the retail price of smart phones and the cost of the devices for the company is more than double the difference for basic devices. However, the Free Press letter notes that, in making this claim, Verizon failed to provide any supporting documentation. Furthermore, a number of public interest groups are claiming that the cost difference for most wireless devices is under $15, a number so small that, even when multiplied by 10, it is still less than the company’s initial ETF of $175. Echoing a complaint made by Commissioner Mignon Clyburn, the letter also questions Verizon’s argument that the increased ETF is necessary to cover a number of Verizon’s business expenses, such as advertising, sales commissions, customer service costs, and the company’s investment in its data network.

Verizon claims that it ensures that its customers are not billed for accidental data usage, insisting that consumers will not be billed for using Verizon’s homepage, yet hundreds of Verizon’s customers have contacted the company to complain of bills from accidental data usage. The letter argues that Verizon is clearly aware of the problem and should be behaving more proactively towards its consumers, placing the burden of “correct[ing] the harms of misleading¬† and arbitrary billing practices” on the company and not its customers.

More dope on Droid

Free Press’ letter also argues that, contrary to Verizon’s arguments that it has adequately notified consumers of the company’s new ETF policy, “many prominent television ads for the Motorola Droid offer no discussion of contracts of penalties. Furthermore,¬† the letter states that “Verizon’s print advertisements similarly fail to clearly disclose the early termination fee,” citing Verizon’s “most detailed example of disclosure” that was apparently too convoluted, vague, and confusing for the average consumer to realize that “the prominently advertised $199 price comes with a potential $350 penalty.”

Based on Verizon’s lack of answers to the aforementioned problems, the letter requests that the FCC “demand accurate and complete answers from Verizon” in an accelerated investigation of Verizon’s anti-consumer policies with the impact of these policies on competition and the public interest in mind.”

I hate to say it, but I told you so.

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