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.
February 8, 2010; 7:35 PM ET
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