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Verizon doubles cancellation fee to $350
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A Verizon Wireless store in Brentwood, Calif.
Verizon today confirmed reports elsewhere online that it's going to double the early termination fee (ETF) for wireless service to $350 on some new model smartphones and other devices.
Also today Verizon revealed that two new Android-powered phones will go on sale at its stores Friday. Besides the much-publicized Motorola Droid, selling for US$199.99 after rebate and with a contract, the HTC Droid Eris will also go on sale for $99.99 after rebate and with a contract.
After reports on Fierce Wireless and the Boy Genius Report blog, Verizon confirmed for me that the higher cancellation will be imposed on "advanced devices" sold with a Verizon service plan beginning Nov. 15.
In an e-mail, Verizon Wireless spokeswoman Jenny Weaver emphasized that Nov. 15 start date and cited smartphones and netbooks as examples of the "advanced devices" to which the higher ETF applied. Furthermore, "This new ETF associated with advanced devices will start at $350 and will decline by $10 per month," she stated. Service contracts generally run two years, after which the subscriber goes month-to-month and can cancel service without penalty.
Boy Genius speculated that the higher ETF, which for existing subscribers remains at $175 and declines by $5 a month, is to protect the subsidy Verizon pays to device makers to make the phone or netbook affordable to customers.
At just $175, a subscriber could cancel their contract, pay the termination fee but sell the device online and potentially make a profit. Boy Genius also notes how a customer could play "Flip My Blackberry" given that Verizon has a buy-one-get-one-free promotion for a BlackBerry Storm2. Someone could get service for one of the Storm2s and sell the other one on eBay. The report also notes how big a break subscribers get on the phone when they buy it with a plan rather than without. The Storm2 sells for $179.99 with a two-year contract and $539.00 without one.
For those who want to get the new and much-hyped Motorola Droid, running Google's Android OS, and avoid the higher ETF, buy it before Nov. 15. The Droid goes on sale tomorrow.
Also on Friday, the HTC Eris hits Verizon store shelves. The Eris has some of the same features as the HTC Hero sold on Sprint's network for $179.99 after rebate, though it must be missing something to explain the $80 price difference. The Eris features a 5.0 megapixel camera, a 3.2-inch touchscreen, integrated GPS, multiple Google apps and other goodies.
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