FCC member berates Verizon for termination fees

Commissioner Mignon Clyburn says in an open letter that she find Verizon's defense of its early termination fees to be "unsatisfying and, in some cases, troubling."

An FCC commissioner has sent an open letter to Verizon Wireless, scolding the carrier for its new early termination fees.

Mignon Clyburn,
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Mignon Clyburn, one of five members of the Federal Communications Commission, was responding to the defense that Verizon sent the FCC last week about early termination fees, or EFTs.

"The company's answers...are unsatisfying and, in some cases, troubling. In particular, I am concerned about what appears to be a shifting and tenuous rationale for ETFs," she said in a statement (PDF) released Wednesday by the FCC. "No longer is the claim that ETFs are tied solely to the true cost of the wireless device; rather, they are now also used to foot the bill for 'advertising costs, commissions for sales personnel, and store costs.'"

Verizon's early termination fees recently climbed from $175 to $350 for smartphones and other "advanced devices." In early December, the FCC asked Verizon to explain itself.

Among its defenses, Verizon asserted that the fees enable the company to sell phones at lower upfront prices and to reduce losses if customers break their contracts early. The carrier also noted that it prorates the fees and that the additional revenue helps keep its broadband network strong.

Clyburn asserted that consumers already pay hefty amounts to carriers. "So when they are assessed excessive penalties, especially when they are near the end of their contract term, it is hard for me to believe that the public interest is being well served," she said.

"I am also alarmed by the fact that many consumers have been charged phantom fees for inadvertently pressing a key on their phones thereby launching Verizon Wireless's mobile Internet service. The company asserted in its response...that it 'does not charge users when the browser is launched,' but recent press reports and consumer complaints strongly suggest otherwise."

A Verizon representative told Bloomberg that the company will "take a good hard look at her concerns and address them in an appropriate fashion."