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Google drops Nexus One early cancellation penalty to $150 after federal review

Google said Monday it is lowering a fee it charges Nexus One customers who cancel service for their phones early following a review by the Federal Communications Commission into the charge.

The company said it has reduced its "equipment recovery fee" to $150 from $350 for customers who cancel service subscriptions with T-Mobile after 14 days and within 120 days of purchasing the phone. Customers who cancel subscriptions within 14 days aren't charged penalties by Google.

The recovery fee provoked a backlash among consumers and public interest groups. Coupled with T-Mobile's $200 own early termination fee on service for the phone, the charge from Google could make returns of the Nexus One handset cost customers as much as $550.

"We’ve been working with T-Mobile to improve our customers’ overall Nexus One experience through a reduction in the equipment recovery fee (ERF) associated with purchasing the Nexus One with a T-Mobile service plan," Google said in a statement. "Google’s overall financial philosophy with regard to operator service plans remains unchanged: We make no profit from commissions from operators or from equipment recovery fees, and our recovery fees are based on operator charges to Google for early termination of service."

T-Mobile hasn't lowered it early termination fee for long-term subscribers with the Nexus One, and that penalty has also been the subject of complaints by consumer groups. Many carriers typically cite the cost of subsidizing a handset as the reason for charging stiff early cancellation penalties. But the consumer groups say that because Google's equipment recovery fee makes up for the subsidies on the phone, the carrier's charge appears instead designed to lock consumers into long-term contracts.

Last month, the FCC sent letters to Google and the other major wireless carriers -- AT&T, Verizon Wireless, T-Mobile and Sprint Nextel to explain why they charge ETFs and in some cases have raised the fees. Verizon Wireless raised its ETFs for smartphones to $350 from $150 late last year.

By Cecilia Kang  |  February 8, 2010; 7:35 PM ET
 
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Comments

Go to a system where everyone has to pay full price for a phone. Then no contracts or termination fees for any company. This would limit the abuse the wireless companies can put on the individual. Of course that also means they would have less business since no one wants to pay the high cost of a mobile phone. Funny though it works in Europe. The cost of monthly service is also too high that should be looked into by the FCC. It's time to take back the airwaves that the people own. Funny thing is since so many want the phones and wireless service there is no means to stop the abuse by the big three... Verizon is the biggest one who abuse their users... sure they have great coverage and because they know this they make you pay for it... Everyone should move over to Cricket... good plan month to month and low cost too... that would give the big there time to think their plans out. Of course they would just buy out Cricket and increase the prices... no win coming for anyone...

Posted by: Concerned5 | February 9, 2010 7:25 AM | Report abuse

Just remember that cell phone (nexus or otherwise) is not food. It is perfectly fine if you do not have a nexus phone. It is not going to kill you if you do not have a Nexus cell phone from T-Mobile. Also, if you were told about the fees, do not buy one.

Posted by: philly3 | February 9, 2010 10:30 AM | Report abuse

Quote:
Last month, the FCC sent letters to Google and the other major wireless carriers -- AT&T, Verizon Wireless, T-Mobile and Sprint Nextel to explain why they charge ETFs and in some cases have raised the fees. Verizon Wireless raised its ETFs for smartphones to $350 from $150 late last year.

The FCC sent a letter explaining this? Or did the FCC send a letter asking the carriers to explain this?

Posted by: MikeInVA4 | February 9, 2010 2:37 PM | Report abuse

Many countries allow the purchase of a cell phone with services based on 'sim cards' or other subscription method. The US model is not working for the average person. If service providers truly cared 'not to make a profit' from early terminations then they would offer pro-rated terminations. I was a T-Mobile user for 7 years, with the same phone (I'm a luddite). When I moved to another area with lousy coverage they wanted me to pay $225 for early termination! What a crock. I couldn't even pick up their towers in my driveway. US citizens are too lazy to push the companies to a more user friendly business model.

Posted by: MI-Sooner | February 9, 2010 6:22 PM | Report abuse

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