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Verizon Wireless to FCC: Smartphones more costly

Mon, 12/21/2009 - 7:25am
Rachel Metz, AP Technology Writer

SAN FRANCISCO (AP) – Verizon Wireless said Friday that it doubled the fees for customers to break service contracts for smartphones because those devices cost much more.

Verizon said the difference between what it pays manufacturers for phones and what it charges contract customers is more than twice as large for smartphones as it is for standard cell phones.

The explanation Friday came in response to an inquiry earlier this month from the Federal Communications Commission on why the carrier doubled the maximum early termination fee for smartphones to $350 from $175.

Verizon's response also follows last week's report from the Government Accountability Office, the investigative arm of Congress, saying the FCC needs to increase its oversight of the wireless industry and improve its enforcement of consumer protection rules. The FCC launched a series of inquiries into the state of the wireless industry several months earlier.

In a letter to the FCC, Verizon also said that it costs more to sign up smartphone users because it can take more time for sales and customer service workers to help customers understand advanced features and functions on the handsets.

The carrier added that it makes "significant ongoing investments" in the broadband data networks and services that allow customers to use these phones. Those investments "are put at risk when customers fail to fulfill a contractual term," the company said.

Verizon, like several other carriers, lowers the price of the early termination fee over the length of the contract. A Verizon customer who canceled a two-year contract after 23 months would still be charged $120, though.

The FCC had also asked Verizon about $1.99-a-megabyte data access fees that have appeared on the bills of customers who don't have data plans, but who accidentally initiate data access by pressing a button on their phones.

Verizon has said that it had stopped charging such fees when a customer starts a data service but then quickly shuts it off.

Verizon reiterated that on Friday and said some phones can be reprogrammed to add or remove a Web browser link from the main menu, or to reassign a button that is programmed ahead of time to access the Internet. It also said customers can request that Verizon block them from using data so they can't access the Internet on their phones.

The FCC said it was reviewing Verizon's letter.

More Broadband Direct 12/21/09:
•  MPEGIF launches '3-D over MPEG' campaign
•  DirecTV asks FCC not to include its boxes in retail
•  Verizon Wireless to FCC: Smartphones more costly
•  Limelight Networks buys EyeWonder for $110M
•  Netflix sued for violating privacy laws
•  Future TV the focus of Master Class at CES
•  Maine to consider cell phone cancer warning
•  Broadband Briefs for 12/21/09
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