by: Jason Mick
U.S. Federal Communications Commission member Mignon Clyburn has written a response to Verizon essentially calling it a liar about its mobile internet fines and saying that its response about early termination fees being used for advertising and other purposes was "troubling". (Source: Radio Facts)
(Source: FCC via Gizmodo)
Investigation will continue in the new year, action may be forthcoming
For all the flak that AT&T has been getting lately, this time it's Verizon that's at the center of a growing controversy. Verizon recently doubled its early termination fees from $175 to a hulking $350 on "advanced devices" (smartphones). While it does prorate the fine, as other carriers do, this is the highest ETF of any major U.S. carrier (most charge between $150 and $200). In other words, feel free to join the nation's largest wireless network -- but don't leave it, or you'll be sorry.
It wasn't just customers that were offended by this new policy. The U.S. Federal Communications Commission launched an inquiry into why the carrier had bumped its ETFs. The FCC was probably tired of hearing consumer complaints -- according to the Government Accountability Office, since 2004 ETFs have been a leading source of complaints to the FCC about cell phones.
Verizon responded, defending its tactics by explaining that without the fines customers could potentially sell its discounted smart phones at a profit (after cancellation). It also revealed, though, that unlike most carriers, it was applying ETFs to other purposes such as advertising expenses.
Now Mignon Clyburn, one of the FCC's five board members has sent a letter to Verizon, criticizing the response. She writes that the carrier's response was "unsatisfying and, in some cases, troubling". She says that customers already pay "high" fees and that the public interest isn't served by slamming them with big fines.
She also essentially called Verizon out when it comes to the company's web services fees. In addition to the ETF debacle, the FCC is also investigating claims that Verizon has been slapping fines on customers that press the web service button. Verizon, in its letter to the FCC claimed that this was untrue and that any fees were billing errors. Ms. Clyburn comments that the "press reports and consumer complaints strongly suggest otherwise." She says that she is "alarmed" by the fact that customers "have been charged phantom fees for inadvertently pressing a key on their phones launching Verizon's Wireless mobile internet service."
She states ominously, "I look forward to exploring this issue in greater depth with my colleagues in the New Year."
The FCC has the right to impose fines on carriers it finds to be violating consumer protection laws or the reasonable practice guidelines it sets out. Though it seldom uses this privilege, it does command a good deal of clout in the telecommunications industry. If nothing else, an FCC investigation and ruling against a company like Verizon spawns a long trail of bad press, something most company would like to avoid, if possible.
The FCC has published a series of guidelines about early termination fees, which Verizon may be violating. One thing that weakens the carrier's argument is that many of its rival carriers like T-Mobile have actually lowered early termination fees, even on discounted smart phones.
