Verizon: Our $350 Early Termination Fee Helps Consumers

Moreover, the fee reflects Verizon's costs for providing advanced mobile devices and the broadband demands of those devices at a reasonable price, the carrier has stated.

Verizon is looking to defend its new $350 ETF for high-end mobile devices following a probe by the Federal Communications Commission (FCC). In a statement to the FCC released Friday, Verizon said charging high prices for early termination actually helps it keep costs low for consumers looking to buy mobile phones.

Verizon on Nov. 15 declared it would increase the ETF for "advanced devices," meaning mobile phones with services like high-resolution cameras or WiFi that went beyond what consumers can buy in a basic cell phone. The fees for early termination of advanced devices were doubled, from $175 to $350.

In response, the FCC sent a letter to Verizon earlier this month asking for clarification on Verizon's pricing.

In that letter, Ruth Milkman, chief of the FCC's wireless communications bureau, and Mark Stone, acting chief of the FCC's consumer and government affairs bureau, asked Verizon for "a more complete understanding of these practices," and laid out nine questions on ETF and mobile use for Verizon to answer.

In Verizon's response, dated Friday, Dec. 18, Verizon states that the higher fee "reflects the higher costs associated with offering those devices to consumers at attractive prices, the costs and risks of investing in the broadband network to support these devices, and other costs and risks."

Verizon sent the FCC a 13-page statement with 64 pages of supporting documents, which in essence boil down to Verizon paying the cost of being able to offer consumers more bang for their buck as they acquire mobile devices.

"This pricing structure enables Verizon Wireless to offer wireless devices at a substantial discount from their full retail price," Verizon writes. "By reducing up-front costs to consumers, this pricing lowers the barriers to consumers to obtaining mobile broadband devices. It thus enables more consumers, including those of more limited means, access to a range of exciting, state-of-the-art broadband services and capabilities."

ETFs have been a recent focus of Congress and the FCC. Sen. Amy Klobuchar (D-Minn.) earlier this month introduced a bill that would lawfully limit the amount mobile device carriers can charge for ETF and also require carriers to prorate their fees. Klobuchar has attacked the problem before; she and Sen. Jay Rockefeller (D-W.Va.) helped bring the issue of ETFs to Congress' attention in the 2007 Cell Phone Consumer Empowerment Act.

A November 2009 study by the Government Accountability Office named early termination fees as among the top four complaints consumers made to the FCC about wireless phones and wireless carriers between 2004 and 2008.