Verizon in the Hot Seat

Look, I think Verizon has the duty to make a buck for its shareholders. It also in my view has a obligation to play fair with its customer base. Sometimes the two are in conflict. When that happens, sometimes the FCC takes notice –

“Late Friday, Verizon Wireless responded to the Bureau’s queries. The company’s answers, however, are not satisfying and, in some cases, troubling. In particular, I am concerned about what appears to be a shifting and tenuous rationale for ETFs. 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.’ Consumers already pay high monthly fees for voice and data designed to cover the costs of doing business. 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.

“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 to the Bureau that it ‘does not charge users when the browser is launched,’ but recent press reports and consumer complaints strongly suggest otherwise.

“These issues cannot be ignored. Wireless communications are an essential part of our lives, linking us to our places of business, our communities, and our loved ones. The bottom line is that wireless companies can truly earn their desired long-term commitments from consumers by focusing primarily on developing innovative products, maintaining affordable prices, and providing excellent customer service. I look forward to exploring this issue in greater depth with
my colleagues in the New Year.

Or so says Mignon Clyburn.

Verizon responded –

* most customers who terminate do so in the first year;
* no matter when a customer terminates a contract, Verizon loses more money than the ETF covers;
* based on those two points, Verizon would lose too much money if it evenly prorated the $350 ETF;
* so by unevenly prorating, Verizon can keep the initial ETF lower than it otherwise would be, but high enough over the life of the contract to adequately offset losses.

Here’s the problem with their logic. If the customers require such high support $$ then adjust you plan rates. Also please explain why we keep hearing in the press about phantom key sequences that activate services without knowledge of the customer. It might explain the additional support costs. Also if most smartphone users quit in the first year then smart money would say you slam them for $350 up to and including month 13 or 14. Then prorate monthly as the chance of leaving has decreased significantly. Eh?

Bottom line? All the carriers thought they were just selling a cell phone with the capability to view short video clips. They never thought people would spend hours watching YouTube clips, short films, etc. They were wrong, got caught flatfooted and so now they are CYA’s themselves all over the place. No sympathy fellas.

Linky.