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FCC Criticized over Early Termination Fees

The FCC is not doing as well as it could be when it comes to giving oversight to the wireless industry, according to a report from the Government Accounting Office. The glaring stat in its report? The GAO points out that 42 percent of customers that considered switching carriers didn’t because of early termination fees.

“GAO has pinpointed one key reason for consumer dissatisfaction — early termination fees charged by carriers — which raises concerns both from a consumer protection and a competition standpoint,” said U.S. Representative Ed Markey, former chairman of the House Energy and Commerce Committee’s Subcommittee on Telecommunications and the Internet, in a statement. Markey, a Massachusetts Democrat, added: “In the digital age, where technology can change overnight, consumers should not be chained to their wireless provider for years through exorbitant early termination fees.”

The FCC is attempting to address the issue: last week it said in a letter that it would like to know why, exactly, the cellco has doubled its early termination fees (ETFs) to $350 for users with smartphones like Blackberries and the Motorola Droid. It’s the highest fee ever imposed by a major wireless carrier. Regulators are also curious as to why those customers without smartphones are charged $2 for accidentally accessing the Internet.

Consumer groups have called the practice “punitive” and unnecessary, particularly considering that the monthly contract payment for a high-end device is rarely inexpensive.

Verizon Wireless has been asked to explain its approach to the FCC by December 17.

But it’s not just ETFs that concern the GAO. While 84 percent of consumers say they are very or somewhat satisfied with their wireless service, 31 percent of mobile customers find their bill confusing, and 34 percent have been upset by unforeseen charges. To boot, most U.S. residents – 250 million of which are cellular subscribers—aren’t aware that they can complain to the FCC.

“While the percentages of dissatisfied users appear to be small, they represent millions of people,” the GAO report said.


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