Friday, January 15, 2010

Report: Verizon to Double FiOS Early Termination Fee

According to a posting in DSL Reports, Verizon will be raising the early termination fee (“ETF”) for its FiOS television and broadband Internet service to $360 on January 17th. This amount will be double the $179 ETF in place in 2009 for a two year contract, and nearly two and a half times the $149 ETF in effect back in 2007.

The report went on to state that the ETF will be pro-rated, decreasing slightly for every month under the contract. FiOS customers apparently can avoid the ETF if they sign up for residential voice service as well. However, users will be forced to pay this ETF if they move to a non-Verizon area. As noted by DSL Reports, “That's a tricky proposition in markets like Manhattan, where a user could technically move a few blocks and wind up in an area that hasn't been wired with FiOS yet. Verizon has promised to wire all of NYC by 2014, but the NYC franchise agreement does allow some wiggle room – and you can probably expect Verizon lawyers to wiggle once the most lucrative neighborhoods have been wired.”

This increase comes on the heels of growing pressure from Congress and the FCC to reduce or eliminate ETFs for wireless services. Senator Amy Klobuchar (D-MN) has introduced a bill to set limits on ETFs. It would also require wireless providers to pro-rate ETFs and clearly notify customers about the fee, not only at the time of purchase, but for the duration of their contracts.

At the same time, the FCC has an open proceeding examining the appropriateness of ETFs in a wireless context. But even as this momentum is leaning against the application of ETFs for wireless services, is looking to double the ETF on its fiber optics service. It is time to cast a critical eye on ETFs in areas other than wireless.

Lou Manuta

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