Internet search giant Google has slashed its fee for returned Nexus One smartphones by more than half. The fee went from $350 to $150 after consumers clogged Internet forums with complaints about the fee.
Effective immediately, customers who bought Google's Nexus One phone and cancel or downgrade their wireless plan within 120 days from activation may be charged a $150 equipment recovery fee, according to the company's U.S. terms of sale. Customers who return the device to Google within 14 days won't be charged the fee.
"I thought Google was trying to be different and shake things up a bit in the wireless industry," one poster using the name mhammo said said before the fee was reduced. "Not only is the customer service related to Nexus One in really bad shape, we now learn that Google will implement their own ETF of $350 on top of any ETF imposed by the carrier. I don't begrudge them making a profit, that's a no-brainer, but let's be reasonable."
FCC Steps In
Even with Google's lowered fee, Nexus One users may think twice before returning the device because wireless carrier T-Mobile charges a $200 early termination fee.
"Google's fee seems a little high, given the fact that consumers are also paying an ETF to T-Mobile," said Michael Gartenberg, a vice president of Interpret.
Besides online forums, the Federal Communication Commission received a slew of complaints about the fee, and the FCC put pressure on Google.
Mobile-phone makers and carriers have been under close watch by the FCC in recent months after the agency launched an internal consumer task force. Led by Joel Gurin, chief of the FCC Consumer and Governmental Affairs Bureau, the group is charged with investigating consumer complaints against companies like Google.
The Internet search giant, however, isn't the only one feeling pressure from the FCC task force. In recent months, the FCC has also blasted Verizon Wireless and AT&T about similar spikes in fees.
In December, FCC Commissioner Mignor Clyburn said Verizon had some explaining to do after the company increased its early termination fee from $175 to $350. Clyburn asked that Verizon reconsider the hike that will affect tens of thousands of Verizon users.
Here To Stay
Google justified its $350 fee and now $150 fee by telling customers the fee is not a penalty, but is instead to cover liquidated damages that Google incurs as a result of the cancellation.
Companies attempting to find a balance between fair pricing and running a business will continue to apply these fees, say observers.
"I think they will because if they don't, they're potentially out a lot of money," Gartenberg said. "If in the end they're not legally able to charge an ETF for a subsidized device, we might see more carriers selling only unsubsidized devices to consumers at higher costs."
"Of course, some could argue that carriers are being excessive, charging fees where there's no subsidy involved or charging costs that don't reflect what the actual cost is," Gartenberg added.