This is probably the worst thing that could have happened to Verizon. It had planned a business strategy to ensure more profit, but it backfired very badly. Verizon had decided that it would increase its ETF (Early Termination Fees) for its handsets, and make it $350. This motion was taken last year. But Verizon forgot that no one likes ETFs. Verizon customers were positively fuming at this ploy, and this plan didn’t impress any of Verizon’s fans at all. So, the state of California decided to uphold an appeal against Verizon. The state of California decided that this fee was unfair to customers, and decided to appeal in favor of the users. As a result, Verizon will now have to pay $21 million as settlement fee. It will have to award refunds to 175,000 customers.
Both Verizon and AT&T have very high fees. So, signing a contract and committing to an ETF is a very tricky thing for them. They charge $350 and $325 respectively. They are so money-minded, that it would seem that even after you die, Verizon would want to collect its termination fees. There is one thing these carriers can do to cope with these changes. They can charge a lower fee each month, and start a contract. Therefore, if the user decides to leave, then the user’s cost will be prorated.
Although this whole thing may seem to be a win for customers, there is nothing to be very happy about. It does not look like things are going to be improving, any time soon in the near future. The cellphone carriers claim that there is only one way they can offer such heavy subsidies. They can only do this by ensuring that the ETFs are in place. This is a precaution they must take, if, just in case a customer tries to run with a smartphone, 2-3 months into the contract.