Verizon Wireless Raises Early Termination Fee from $175 to $350

In advance of its latest smartphones going on sale today, Verizon (News - Alert) Wireless has announced that it will be raising its early termination fee from $175 to $350.

Meanwhile, the other top three top carriers – AT&T, Sprint and T-Mobile (News - Alert) -- are sticking with their current fees, at least for now.

 

Verizon insists the decision is justified because of the higher prices of today's phones. Most carriers have implemented early termination fees of around $200 to recoup for the cost of the phones which they provide to customers for free -- or for a subsidized price. Most carriers pro-rate the price, so that it declines as customer’s contract wears on (typically about $10 a month or so).

 

For example, Motorola's (News - Alert) new Droid, at full price, costs $560, but with a two-year contract, Verizon sells the handset for $200. That translates into a $360 subsidy (assuming Verizon actually purchased the Droids at that price).

Whether the other carriers will follow suit is yet to be seen. Considering the current state of the economy, it’s entirely possible that they’ll decide to keep their current ETF structures in place -- and use Verizon’s new fee increase to their advantage in their marketing campaigns.