Friday, October 8, 2010

Increasing ETFs: Fair or Injustice?

For as long as I can remember, early termination fees were a fee that ensured customers did not break their contacts as well as subsidizing the mobile handset. With the recent increasing number of carriers raising their Early Termination Fees (ETF), we have to wonder if this is justified or are the mobile carriers trying to make a profit by penalizing customers who break their contract terms.

As of this posting, there are currently 2 major carriers in the U.S. that have in the past year increased their ETF to almost double the amount previously. It also has sparked numerous questions by the FCC as this is drawing a lot of attention from consumers.

For this example, we will be looking at a full MSRP price of the Blackberry Curve 8530. It is currently priced at $359.99 without a contract, and FREE with a contract. The Blackberry Curve 8530 is considered a low-mid range smartphone as compared to the Blackberry 9650.

The Blackberry 9650 full MSRP price is $509.99 and $149.99 for a 2 year contract. Given these two phones and if they were both purchased with a 2 year contract, it would be advantageous for Verizon Wireless to sell the Blackberry 9650 as they will be able to collect on the same amount of ETF regardless of which phone is chosen.

Blackberry Curve 8530
0 Initial Phone cost
+350 ETF
= 350 (MSRP = $369.99)
= $19.99 Difference

Blackberry Bold 9650
150 Initial Phone cost
+350 ETF
= 500 (MSRP = $509.99)
= $9.99 Difference

Are the cell phone carriers getting away with raising the ETFs? Yes. Is it a lot? No, because at most they are pocketing is no more than $10-30 dollars and that is only assuming that person cancels within the 2nd month of their 2 year contract.

Honestly, we should be very glad that the carriers even subsidize the phones in the first place. Does anyone need to be reminded of the iPhone's original $600 release? I pray that we never have to go through that again.


  1. Cell companies are evil...... 25cents per txt.... my asssss

  2. Yeah I totally agree with this. As an avid blackberry owner some of this just stuff is just ridiculous.

  3. ETFs aren't a bad thing in themselves. The company need a guarantee that you'll stay with them (before they offer you free phones and such), and breaking that contract should have consequences. But they're definitely getting out of hand, in my opinion. Big surprise, communications companies are taking advantage of us. =D