Google Explains Nexus One ERF Price Cut to the FCC

 
 
By Clint Boulton  |  Posted 2010-02-24 Print this article Print
 
 
 
 
 
 
 

Google told the Federal Communications Commission it reduced a fee charged to buyers of its Nexus One smartphone that canceled their service contract early to clear up concerns and confusion in the market. Google cut the Equipment Recovery Fee, designed to help Google recoup money it owed to T-Mobile in the event of any contract that was terminated within 120 days, to $150 from $350 Feb. 4. Google also said it canceled plans to show software developers its Nexus One in Beijing, owing to the current discord between Google and China over a hack on the search engine's servers.

Google Feb. 23 told the Federal Communications Commission it reduced a fee charged to buyers of its Nexus One smartphone that canceled their service contract early to clear up concerns and confusion in the market.

Shortly after Google began selling the Android-based Nexus One from its Web store Jan. 5, bloggers discovered that Google would charge consumers a $350 Equipment Recovery Fee if they bought a subsidized Nexus One for $179 through T-Mobile and canceled the contract before 120 days.

That fee stood in addition to the $200 Early Termination Fee they would pay to T-Mobile for canceling their contracts early. In essence, Nexus One users who nixed their Nexus One contracts within four months would pay $550, close to the $579 Google charges for an unlocked Nexus One sans wireless contract.

Users complained; the FCC listened. The FCC Jan. 26 sent letters to AT&T, Google, Sprint and T-Mobile asking how ETFs are charged and if consumers are adequately informed of the ETFs. The FCC also wrote in letters to Google and T-Mobile:

"The combination of ETFs from Google and T-Mobile for the Nexus One is also unique among the four major national carriers. Consumers have been surprised by this policy and by its financial impact. Please let us know your rationale(s) for these combined fees, and whether you have coordinated or will coordinate on these fees and on the disclosure of their combined effect."

Google Feb. 4 slashed its ERF to $150. The search engine and wireless carriers Verizon Wireless, T-Mobile, AT&T and Sprint explained their ETF practices in letters to the FCC Feb. 23.

Google explained that as part of its contract with T-Mobile, T-Mobile pays Google a commission for each new T-Mobile subscriber and each existing T-Mobile subscriber that upgrades her or his service plan through the Web store. This enables Google to charge customers $179 for a Nexus One instead of the $579 fee for an unlocked, unsubsidized device.

When a subscriber cancels her or his service agreement with T-Mobile within 120 days, T-Mobile seeks full repayment of the commission from Google, wrote Richard Whitt, Google's Washington telecom and media counsel, in the letter to the FCC.

The ERF, he wrote, helps recover monetary amounts for which Google is liable to a mobile operator in the event of an early cancellation of the service plan by that mobile operator's customer.

Google said that while it cut its ERF in "response to concerns raised regarding fees" it had not yet processed any ERFs related to cancellation of a Nexus One purchaser's mobile service contract with T-Mobile.

That means Nexus One users are happy with the phone despite complaints of spotty 3G service and other issues, or that customers don't wish to pay the combined $350 ERF and ETF from Google and T-Mobile.

In other, not-so-pleasant Nexus One news, Google said it canceled plans to show software developers its Nexus One in Beijing, owing to the current discord between Google and China over a hack on the search engine's servers.

The move also comes after Google delayed the launch of two Android phones in China.

 
 
 
 
 
 
 
 
 
 
 

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