FCC Investigates Early Termination Fees in Wireless Industry

Strategic Insights -

The Federal Communications Commission (FCC) has launched an inquiry into the early termination fees (ETFs) charged by the four major national wireless carriers and Google, seeking information on how they disclose these charges to consumers and how they set them. The FCC's investigation is part of its new Consumer Task Force, launched recently, and aims to determine whether consumers are adequately informed about ETFs and whether these fees are reasonable. The FCC's letters to the carriers and Google followed a previous letter to Verizon Wireless in December 2009, which drew criticism from consumer groups and the FCC Chairman, Julius Genachowski.

Key Takeaways:

  • The FCC is investigating ETFs in the wireless industry, seeking information on how they are disclosed to consumers, how they are set, and what they are meant to cover.
  • The agency wants to determine whether consumers are adequately informed about ETFs and whether these fees are reasonable.
  • The FCC's inquiry is part of its new Consumer Task Force, launched recently.
  • The agency is seeking information from the four major national wireless carriers and Google on their ETF policies and practices.
  • The FCC wants to know the rationale behind the structure and level of ETFs, as well as how they are disclosed to consumers.
  • The agency is also seeking information on whether customers are surprised by ETFs and their financial impact.
  • The FCC is concerned that disclosure of ETFs and their justification follows no clear format.
  • Industry groups, including CTIA and AT&T, argue that ETFs can benefit consumers when they save money on getting the latest devices.

Statistics:

  • The FCC is seeking information on the ETFs charged by the four major national wireless carriers and Google, including Verizon Wireless, AT&T, Sprint Nextel, T-Mobile, and Google.
  • The agency is interested in learning about the structure and level of ETFs, including whether they are prorated and how they vary by device.
  • Industry groups, including AT&T and T-Mobile, argue that they offer plans with no ETFs.
  • The FCC's inquiry is part of its ongoing effort to promote transparency and consumer protection in the wireless industry.
  • ETFs are substantial fees that have an important impact on consumers' ability to switch carriers.

Sources:

  • [1] "FCC examines wireless carriers' early termination fees," The Washington Post, Jan. 26, 2010.
  • [2] "FCC to issue special reports on early termination fees," BNET, Jan. 28, 2010.
  • [3] "Genachowski pushes for greater transparency on early termination fees," News-Focus, Jan. 29, 2010.