A few weeks after the FCC sent an inquiry about its early termination fee (ETF) increase, Verizon has replied back with a seven-page missive of its own in defense of the fee hike. If you recall, Verizon increased its ETF from $175 to $350 specifically for "advanced devices," which we assume means smartphones like the Droid.
Verizon claims that the ETF allows the company to offer the phones at lower upfront prices and to reduce its losses if the customers do break their contracts early. Even with such a fee increase, Verizon claims it would still be losing money, since the carrier does prorate the ETF the longer you're in the contract (never mind that you still owe $120 in ETFs if you quit in the 23rd month). Verizon also points out that additional revenue from the ETFs is useful to keep its broadband network strong (a dig at AT&T, perhaps?). The company answers the FCC's questions about ETF awareness by saying it is making it very clear to customers, with advertising and marketing material.
We were hoping that we would get at least a lowering of the ETF out of all this, but it seems that Verizon is holding strong to its fee increase. It's the FCC's move next, to see if we can get any kind of reprieve at all.
Source: Verizon's response to the FCC via Phonescoop