The recent launch of Google's highly anticipated phone offering, the 'Google Nexus One', has seen a fresh approach to the controversial process of payment plan termination. Customers wishing to end their plan prematurely will now be forced to pay the full difference in retail price, in relation to the subsidized price of the phone with Google's partner provider company, T-Mobile.
In this bold move by Google, they intend to combat the increasingly popular practice of customers opting out of their plans simply to sell their device on eBay. The concept involves customers purchasing an Unlocked Google Nexus One only receiving the subsidized rate if they see out a minimum “120 days” of their plan with the carrier T-Mobile on a two year agreement.
Although termination fees are nothing new in the lucrative mobile phone industry, in the past it has only been the carrier that has enforced such penalties. In this case, the phone hardware provider Google is seemingly cashing in as well, billing the termination item as the “Equipment Recovery Fee”. As a result, the subscriber is forced to pay termination fees to both manufacturer and service provider.
For example, if a customer terminates their contract within four months, they will pay T-Mobile $200 and Google $350. This amounts to $550 in total costs for terminating the two year plan.
General concern rests with Google's involvement in this process as it appears over protective of its device, possibly to the detriment of sales.
The increase in the termination fees will certainly aid Google in its fight against black market retail of the device, which is forecasted to be a huge problem.
The strategy certainly has further downsides. Unfortunately, legitimate customers who wish to terminate their plans will be expected to fork out the bill as well. Much discussion in online tech magazines revolves around this issue, as it is condemned to be poor consumer practice.