Verizon won’t replace my broken phone – do I still owe an early termination fee?

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Question: We were happy Alltel Wireless customers for several years. In July 2011, Verizon Wireless took over our local Alltel service. During this transition we were assured that Verizon would meet our needs just as Alltel had for several years. We chose to stay with Verizon as they transferred our plan and made wonderful promises.

Our wireless phone needs are very basic. We have four lines, all of which require only minimal minutes and texting services (two are used by my senior-citizen parents). We would even do without video messaging.

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Recently, my husband’s phone broke. As it is very snowy where we live, it is preferable for him to have a phone while commuting to work for safety. I contacted Verizon to replace the phone and was informed that I would not be able to add a replacement phone to my current contract and would need to pick a new plan. I offered to pay full price for the phone to avoid signing a contract and asked if I would then be able to put the replacement phone on my old contract. I was told “no” in no uncertain terms.

The variety of plans currently offered by Verizon make no allowances for they type of service we need at a reasonable cost. The most inexpensive plan that would fit our needs (basic voice and text/no data plan) would increase our monthly payment by approximately $40. This is not something that we are able to pay at this time.

I checked locally and and found that AT&T Wireless offered a plan that was voice and unlimited text for the same price as our current Alltel/Verizon plan. I provided this information to Verizon and essentially begged them to help us. This request was met with a customer service rep informing me (and I paraphrase) that we would just have to pay more if we wanted to stay with Verizon.

We changed to AT&T. Shortly after transferring service, I contacted Verizon to find the total for our final bill and was told that we would be assessed $400 in early termination fees as two of our lines had remaining contracts until June 2013. This was the first I had been informed of this in the many conversations I had with Verizon.

I asked to have these fees waived as they did not offer a service that met our needs at a competitive cost and as they were unwilling to allow us to keep our Alltel plan (which they had guaranteed would be available when they recruiting Alltel customers for Verizon). I was given the standard refusal, and appeals to a supervisor went nowhere.

I would be willing to pay a prorated early termination fee, which in my calculations is roughly $80. I understand that there was a service contract; however, my contract was for the old Alltel plan that they are not allowing me to keep if I need to replace a phone. I don’t feel that this is fair and it strikes me as a method of bullying consumers into purchasing something they don’t need or want.

Judy Schulze, Cadillac, Mich.

Answer: When Verizon acquired Alltel, you probably could have exercised your right to leave your existing cellular contract early. But you chose to stay and sign a contract with Verizon.

Even though Verizon gave you the impression that the service would be comparable to Alltel, the actual promises are outlined in the fine print of your contract — and unfortunately, that contract binds you to two-year agreement. You also agreed to pay an early termination fee if leave early.

Here’s the full agreement.

But here’s something Verizon didn’t tell you: As a way of roping you into another contract, the company will as a matter of policy insist that you sign a new contract if you make any kind of changes to your wireless plan. And that includes getting a replacement phone, in your case.

I’ve encountered this kind of corporate intransigence with a wireless company in the past, too. Even something as minor as changing the number of minutes on my plan meant I would have to sign up for another 24 months.

Fortunately, these onerous contracts appear to be on their way out. T-Mobile recently eliminated it two-year contracts, and thousands of customers have also urged Verizon to ditch its agreements. Simply put, these agreements amount to nothing less than two years of indentured wireless servitude, and I’ll be happy to see them disappear.

But that doesn’t really help you. It seems fundamentally unfair to demand two more years of business for a replacement phone. I see from your notes that you spent a lot of time arguing with low-level representatives and asking to appeal your case to someone higher up the food chain, but getting swatted down. I think you might have benefitted from putting your grievance in writing.

Verizon’s online contact page is not helpful, failing to list an email address or offering a form for you to fill out. Like other wireless carriers, it seems to go out of its way to avoid dealing with a written grievance from a customer.

You could appeal your case to an executive — they’re listed on the Verizon website — and with any luck, your case will be forwarded to an executive resolution department. Email addresses at Verizon are formatted either [email protected] or [email protected]

I contacted Verizon on your behalf. A representative contacted you and agreed to waive one of your early termination fees and prorated your final bill for the days you used.

Should wireless companies charge early termination fees?

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107 thoughts on “Verizon won’t replace my broken phone – do I still owe an early termination fee?

  1. I can see an early termination fee if the customer gets something out of it – say, a new phone. But in this case no new phones were provided. So what was the customer getting in exchange for getting locked in?

    1. The ETF is a safeguard against people buying a highly-subsidized phone and then ditching the contract. In the US, a phone is typically purchased alongside a service contract. To get a “better deal” the phone is highly subsidized (often a reduction in price of $200+), but the service contract is inflated by $10-20/month for 2 years. So you’re actually paying MORE in the long run ($240-480 over 2 years for a $200 discount is NOT a “better deal”. If it were possible to get the subsidized phone and then drop the contract, the service provider would lose money, which they’re not going to do.

      So they discourage that by imposing an ETF.

      So what was the customer getting in exchange for getting locked in?

      The OP did get something in exchange for getting locked in: a new phone (when they signed the contract).

      Just because that no longer seems like a good idea in retrospect doesn’t mean they get to change the terms of their agreement after the fact.

      1. “but the service contract is inflated by $10-20/month for 2 years.”

        I have never heard of the monthly fee dropping after the two years. This is actually one of the things I hear people yelling about with subsidized phone. After the two years of subsidizing and the carrier has recouped their costs, the monthly fee should drop.

        1. It certainly *should* drop. But if the cell phone company can gouge you $20/month without you complaining, they’re gonna do it.

          That’s why I like T-Mobile’s way of structuring things–the phone (and any payment plan for the phone) is separate from the service contract.

          1. But did T-MOBILE drop their monthly plan rates when they did the switch? I wasn’t following them so don’t know if they did or not.

          2. For a while they offered two sets of rate plans. The first was more “traditional” for the US — get a subsidized phone, lock-in for 2 year contract with ETF, and price of (hypothetically for the example) $60/month. The second was more toward their new model — buy a full-price phone, and price of $40/month for the same service, with a 2-year service agreement (but no ETF, so you’re not “locked in”).

            A couple years ago, I did the second model–bought the full price phone and got the cheaper service. (I did a little math and figured out that it was cheaper in the long run this way — the extra $20/month was more to pay than the $300 phone subsidy.) So that’s how I know the difference.

            When they made the ‘switch’ they simply did away with the first option, leaving the “cheaper” plan. So they didn’t drop their monthly rate, they just got rid of the more expensive option.

            Oh, and they added the option of paying for the phone via a “payment plan” over the course of 12 or 24 months. So you no longer are required to pay “full price” for the phone up front–you can put a down payment and make installment payments over time. (Which still works out to a higher price tag, but they’re basically charging interest for extending you credit, in a way.)

          3. Where does it say that the OP received a new Verizon phone? She should have able finish out the alltel contract and convert to month to month.

          4. The Alltel merger happened 4 years ago, so the customer has to have purchased phones in the last 2 years in order to still have a contract. Even if the customer had changed plans (and the letter from the OP indicates that they did not), VZW has not required a new contract for a simple calling plan change in at least 3 years. Since the longest contract term that VZW has is a 2 year contract, the customer must have purchased phones with a subsidy in the last 2 years to have a valid contract.

          5. Those dates don’t make sense. According to the article she bought her subsidized phones from Alltel. But you and a few others have stated that the merger occurred in 2009. To be under a contract she would have had to purchase her phone in 2011, in which case presumably she would have gotten it directly from Verizon, not Alltel. See the problem?

          6. She is either incorrect about the dates, or lying. The merger happened in 2009. Perhaps she meant to say that she bought some phones in 2011, I don’t know. I do know that integration of Alltel into VZW was complete by the end of 2009. Verizon hasn’t required a contract extension for calling plan changes since at least 2010, and any way, the customer claims they haven’t changed their plan. Therefore, the only way that the customer could still have a contract, and by extension an ETF is if she, or someone authorized to make purchases on her account purchased phones some time in 2011.

      2. My iPhone was $199 subsidized, and was $699 if I bought unsubsidized. So they credited me about $500 and with the 2 year contract are essentially charging me $20 a month for 2 years (ETF reduced by $20 a month), so I come out a few bucks ahead. However, they assign the same 2 year contract to someone who buys a $199 phone for free, or a $299 phone for $99, the phone company is coming out very far ahead.

      3. The OP did get something in exchange for getting locked in: a new phone (when they signed the contract).


        But given they’d offered to buy a new phone at full cost, that wasn’t much of an exchange for them. Pretty amazing they approached the company wanting to pay full price for something and were told “no.”

        1. OK. Let me ‘splain.

          June 2011: Sign a 2 year contract, get a new phone (highly subsidized).
          Sometime in 2012: Alltel switches to Verizon.
          April 2013: Phone breaks. OP is still under contract. Still got the “deal” that put them under a 2 year contract.

          Now, at this point in May 2013, OP wants to buy a new, full-price, unsubsidized phone for the purpose of running out the contract. I think they ought to be allowed to do that without having to sign a new 2-year contract (or at least be able to grandfather in the terms of the old contract). Verizon doesn’t think they should be allowed to do that (which is stupid–I agree with you on this).

          But after being told “no” to that, the OP wants to leave Verizon. That’s fine, they can do that. But the terms of their contract state that they are still required to pay an ETF. And they are still required to pay an ETF because they signed a contract in June 2011 in exchange for a subsidized phone. That was the trade-off they made back in the day. And just because it doesn’t look like a good trade-off now doesn’t mean that they should be permitted to get around the terms of their agreement.

          1. Here’s my problem. Verizon is not honoring the spirit of the contract. Regular Verizon contracts allow you to change phones without changing the contract. Especially if you buy a new, unsubsidized phone. They is no legitimate reason not to allow her the same privilege of changing phones like every other Verizon customer. They are being opportunistic in trying to force her into a higher contract. That’s’ simply not right.

          2. Except that they DIDN’T sign a contract for a subsidized phone. they ALREADY HAD THE PHONE. So what is Verizon recouping?

          3. Actually, the timing of this letter to Chris and the breaking of the phone probably pre-dates May 2013 by several months. Chris usually doesn’t post a case until some time after it has closed.

      4. I think the more important issue here is the practice of automatically extending a service contract, often without even telling the customer you’re going to do it, which borders on fraud. Now if, as you say, the ETF is a requirement of subsidizing the phone, so be it. But once that initial two year service contract is fulfilled, cell companies should be banned from extending contracts unless the customer agrees to it in writing. The practice of “surprise, we extended your contract” should be made illegal.

        This is why I will never, let me say that again, I WILL NEVER, sign a cell phone contract.

  2. My question is, did they actually sign a new contract with Verizon during the changeover? I’ve had family in a similar situation where the local phone plans changed over to Verizon. The changeover was seamless and they didn’t have to sign a new contact in order to maintain service. So how exactly does Verizon justify an early termination fee, if no new contract was signed? On top of that, I thought it was standard for Verizon to pro-rate early termination, yet the customer was stuck with the entire fee until Chris got involved? Something is fishy.

    1. You are typically not signing a new contract in a situation like this. Rather, Alltel has ‘sold’ their contract with you to a 3rd party for fulfillment, which is totally in their right to do.

      But that contract is still in force–they still have to abide by the terms of that agreement, and you still have to pay for the remainder of the months on the contract. If you leave the contract early, you have to pay an ETF. And if Alltel didn’t have a clause in the contract for pro-rated ETF, then the OP would still get charged the full amount.

      The terms of the contract are the exact same as they were before the name at the top changed from Alltel to Verizon.

      The only crappy thing here is that Verizon won’t allow them to continue the terms of the contract while purchasing a new phone–essentially they are not allowing them to be grandfathered in. And that’s total BS.

      1. Then merger happened in 2009 so their current contract is for the phones, at some point the two phones in question were replaced and a new equipment contract was signed. Those phones had to be purchased in the last two years to still have a contract now, so some time in 2011. That’s two years after the merger was complete, and their plan was still grandfathered for them. It was nice of Verizon to allow them to continue the use of that plan for so long. However, it is now 2013, four years after the merger is complete. I don’t find it unreasonable that Verizon has decided that the grandfathering courtesy is now over. As a VZW customer, I will not be permitted to keep my current data plan the next time I upgrade phones. Am I thrilled about that? No, but VZW allowed grandfathering of the old data plans for at least 2 years after they made the change, and frankly, the only companies who offer unlimited data have crummy service outside of major metro areas, so unless something major changes when I am ready to upgrade I will stick with who I have. I’m not so loyal that I will never switch, but there has to be good enough reason to go somewhere else, and right now there isn’t one. And if I ever do switch, I’ll either wait until my contract is up, or pay the ETF I agreed to.

        1. As a VZW customer, I will not be permitted to keep my current data plan the next time I upgrade phones.
          That’s not completely true. If you purchase an unsubsidized phone you can keep your old data plan. I was in that situation just this January. My phone broke so I needed a new phone. The annoying rep tried to get me to change from my unlimited plan but finally admitted that I didn’t have to change plans.

  3. Wouldn’t it be possible to just get an unlocked phone somewhere or maybe a used Verizon phone that someone sold after the end of their contract? Maybe it could be old, but if the point is just to make emergency phone calls, you wouldn’t need an identical phone. My wife and I are on different AT&T plans and we’ve traded phones with no issues.

    1. My best friend is on Verizon and had a similar situation as the OP. His phone broke and if he got a new phone they would change his plan (He currently has unlimited data and didn’t want to loose it). He did exactly what you suggested, he bought a used phone on eBay and got it activated on his account, and still has his old unlimited data plan. His phone is two years old, but it works.

    2. Absolutely; Verizon will activate any Verizon phone that hasn’t been reported stolen. The process can be done for free in about five minutes on the website or over the phone.

    3. @emanon256:disqus and @sirwired:disqus are right — you can typically get a Verizon phone activated –even if it isn’t your original hardware–by calling (though I was under the impression that they charged for activation). But it’s different than AT&T or T-Mobile. You can’t just switch the SIM with any other phone. You actually have to take the step of activating the new phone so that Verizon can associate the SIM with the IMEI of the new phone.

      And they may or may not require you to sign a new contract when you get new hardware. It may depend on the plan and/or the device you’re using.

    4. It really depends. Both Tmobile and AT&T make it difficult to get a sim in the first place. Second if you get the sim how do you add minutes or associate the sim with an actual phone number? Both companies want to charge you something for activating or associating the SIM card with the new phone, since the old SIM card is registered to the IMEI of the old phone. In some situations if its just talk and text you usually can transfer SIM cards around, the issue becomes a problem when it comes to data access.

  4. The only justification for a two year plan for cell service is when the customer gets a subsidized phone. The two year plan allows the company to recoup the cost of a reduced rate cell phone. I’m surprised that she had a termination fee. I’ve made tons of changes to my plan and the only time I’ve been required to sign a two year contract is when I get a new phone.

    1. Same here. I have gone up and down on my rate plan as my needs changes without signing a new contract. But I had t_mobile and now have AT&T and they were both like that. Maybe Verizon is different? Although my friend was in a similar situation with Verizon where he wanted a new phone and was grandfathered into an old plan, and Verizon was adamant that if he gets a new phone he looses his old plan. I believe that may the why the OP is having the problem, they want to keep an old plan. Pretty low of Verizon if you ask me to make someone change to a new plan when they buy a new phone, even if they offer to pay full price for it.

  5. I think the problem is that she wanted to buy an actual brand-new phone directly from Verizon (or a corporate store.) I guess they simply don’t sell those without a new contract. This is an odd limitation, but given the ridiculous “new” prices they charge, it doesn’t effect most people.

    If she had gone to eBay or other used phone source and picked up one there (new or used), all it takes to put it on your account (with no change to contract) is five minutes on the website or a short phone call. I’ve had to replace phones twice on Verizon, and my eBay phones were activated without complaint both times.

    The existence of an ETF makes sense, given that it usually exists to “cover” a subsidy for your phone, and the marketing expenses involved in getting you to re-up. (That said; the ETF in this case seems high… the current ETF for a VzW smartphone starts at $350 and then drops by $10/mo.) This is just the way wireless has evolved in the US: just like stores that run sales take a MAJOR hit when they stop, a carrier advertising 99-cent phones or $99 iPhones is going to be hurting somewhat when they don’t do that anymore. We’ll see if TMobile’s experiment of offering cheaper contracts and phones with Easy Monthly Payments works. (And in some cases, TMo’s setup is worse than a traditional VzW-style contract… there’s NO way to get out of paying for that phone if you, say, move out of a TMo service area, or other condition that would normally allow you get out of a traditional contract with no ETF.)

    But there’s an easier way to avoid the contract-tying, ETF-crammed, mess altogether: Pre-paid. Prepaid Cell Phone service is a much better deal than it used to be, so much so, that for most users, a traditional contract no longer makes sense. There are pre-paid providers (called “MVNO”s) that piggyback on each and every cellphone network. Some will even roam. And they do this at a price that is usually far less than contract carriers. You either buy one of their phones (sometimes it’s subsidized by being carrier-locked) or many providers let you bring your own.

    I’m personally on Page Plus wireless: $55/mo (with NO taxes/fees on top of that), 2GB data, unlimited Talk and Text, Verizon network. I supply my own smartphone I picked up for $150 from an online store. I can use my phone for as long or as short as I want before switching to another, and I never have to worry about an ETF, or “paying” for a phone subsidy I’m not using. For the poster, if all her husband needs is emergency service, one of the “bargain” pre-paid carriers is perfect. I have my Grandma on Page Plus’s cheapest plan… $30 a year, $6 goes towards fees, the rest 10-cent minutes.

    1. The big difference between T-Mobile’s new, no contract plan and traditional cell phone two year contract plans is that you can leave T-Mobile anytime that you want to. If you purchased a used phone like I did, all you need to do is have your new carrier arrange to “port” your phone number to their service. If you purchased a new phone and have monthly payments owed to TMO, You can always sell your phone and use the money to pay off your debt to T-Mobile. The bottom line is that a “no contract” customer has many more options than someone stuck in a two year contract.

      1. If you are using a used phone, then TMobile’s no-contract plan is nothing special. (Any carrier will accept a used phone (compatible with their network) with no contract.) In fact, you can get the exact same service for less money by using a pre-paid carrier that uses TMo’s network.

      2. I know several people who have tried T-Mobile and quit as soon as they could because its “customer service” is the worst in the business. The company’s new no-contract plan will at least make leaving them easier . . . and cheaper.

        1. I have been a T-Mobile customer for about 10 years. My wife also signed up for T-Mobile when I did. During that ten year period, she left T-Mobile twice to go to other carriers because they were offering lower prices on phones. the carriers were AT&T and Sprint. Each time, she came back to T-Mobile when her contract with the other carrier was up. Here primary reason for doing so was that the other carriers customer service was not anywhere near as good as T-Mobile. There has to be a reason that each year,T-Mobile wins J.D. Power awards for the best cell company customer service.

      1. Srwired didn’t say they didn’t. Only that based on the response from Verizon in the story, they will sell you a full price, unsubsidized phone, but it will also include a two year contract. I think this was really a case of Verizon trying to force someone off a grandfathered plan though and into a new contract.

        1. No, they will not require a 2 year contract if you buy an unsubsidized phone, because calling plan changes do NOT require a contract extension. They will require them to change their plan. Chris alluding to the fact that they do make those changes is inaccurate, and I have pointed it out in a different post. It used to be a requirement that you enter a new agreement when you changed plans, but that hasn’t been true for at least 3 years now. The only way to extend your contract at VZW is to purchased phones at the subsidized price. That is the case with most of the major carriers these days, and it has been for years.

  6. They signed a contract so why shouldn’t they be subject to early termination fees? Sirwired explained it well. Seems like a pretty uninformed consumer. Also, my guess is that the Alltel contract just carried over to Verizon. Not another 2 year contract, just the remaining months on the existing one they signed with Alltel.

  7. ETF with no new equipment is wrong, companies are taking advantage in slipping this past so many people.

    Situation was pretty far gone if EFT is already assessed, glad Chris could help. Don’t forget this pain though…

    Someday, consider prepaid, you are the perfect candidate. Page Plus would even activate your Verizon phone and you probably couldn’t tell the difference.

    1. I ran into this problem with Sprint when I added another line to my family plan. They tried putting me on a two year contract even though I was supplying my own phone. They didn’t tell me about it up front. They tried slipping it past me in the fast talk fine print they read to you at the end verifying what was done. I had added lines with my own phones in the past and never got hit with the contract. The rep said it had always been the policy for new lines to be put on a contract regardless if the user provided their own phone but the system had been upgraded so the reps couldn’t over ride it anymore. I called BS on that and had them transfer me to retention so I could cancel my other three lines of service that were not on contract. Surprisingly, he was able to override it when I told him that.

      There was a lawsuit against the carriers over ETF not to long ago dealing with them not being prorated. In a settlement, it was agreed that the carriers should be able to charge an ETF if they were subsidizing a phone and agreed to prorate ETF as that cost was recovered (this is just my summary of the judgement and there are more details available about it with a Google search if interested).

      If any carrier tries putting you on a contract with supplying the phone, just walk away from them. I would have switched over to T-Mobile recently if they had decent coverage in my area for the no contract.

  8. I don’t think this readers poll is a good one today. A straight Yes or No on whether or not an ETF should be charged isn’t really the right options. If you have a subsidized phone and decide to ditch the service early, then there should definitely be an ETF. The company needs to finish paying off that shiny $800 phone you got for $100~$200.

    It is nice to see that Verizon was willing to work with the OP… after getting Chris involved as seems to be the case in so many instances. It’d be nice if someone would just listen from these corporations and and require some public shaming to do the right thing.

    1. My question for you, and for all the other people who think a company should have no recourse for breaking a contract, what about an appartment lease? Do you have any issues with a rental company charging for loses if a person decides to break their lease and move out early?
      How is breaking a Cell Phone Contract, regardless of the subsidy for the phone, any different then breaking a Rental Contract on an appartment?

      1. There is a big difference between an apartment lease and a cellphone contract. An apartment is a limited item. Only one person at a time can rent it. When no one is renting, the owner loses money from the loss of rent. Cell service is not limited in that way. However, if you get a subsidized phone, then that is where the ETF comes in because the carrier would lose money. If they are not subsidizing a phone, the only reason for a contract would be to lock in a customer so they can’t leave when you provide crappy service.

      2. In one of my older apartments, I did have a fee charged to me to break my lease. It was a “sublease” fee and is common in Chicago. Did I have an issue with it? Yea, it sucked but I agreed to it when I took the apartment and I would imagine is justified as covering the expense of an individual putting in the work to find a new renter.

        So in short, no, I don’t have an issue with that but would avoid renting an apartment from someplace like that as I’ve grown more experienced with the games people (especially realtors) play.

  9. To those who voted “No” in the poll, I have my own poll question: “Are you ready to pay the un-subsidized, retail cost of the phone in exchange for no ETF?” Among other things, the ETF is there for the carrier to recoup the cost of that $500 iPhone for which you paid $99 with a 2yr agreement.

    Well.. get ready for that scenario. As carriers move away from contracts the days of the free or $99 highly subsidized phone are over. In exchange for a no contract plan, we will be paying the retail price for our smartphones.

      1. I have never had a contract. I have used Tracfone for years, plus I now have smart phone I bought on Amazon, with a Telestial SIM. If you have a subsidized phone you should certainly pay an ETF, you are paying off the cost of the phone.

    1. I have been paying for my own phones for several years just to stay off of contracts. I put about $50/month into a savings account (got several phones to account for) and when I have enough saved up, upgrade my phone if needed.

      1. What’s the purpose of staying off contract. Unless you’re doing prepay, you’re paying the built-in new phone subsidy anyway. How often do you really change phone companies?

        1. Because I usually buy current but used phones. Can get them at a substantial savings. And there is the ability to leave any time, which I have used to my advantage several times when service is not up to par. It’s amazing how much better service you get when they know you can walk away anytime.

          1. But the cost of the services remains the same. You’re still paying for a new phone subsidy even if you purchase a used phone, or keep the same phone.

            The only way your plan makes sense is if you routinely change carriers frequently, i.e. more than every two years.

          2. Or if I like to change phones frequently. Don’t forget there is also the ability to sell the phone too, cutting down the costs. What would cost someone $600 end up costing me less than $200, what I would pay for a subsidized phone and be stuck with that phone for 18 months (that is time frame for me to get new phones with Sprint).

            Now what I do is not for everyone. I am a software engineer and frequently use the different phones for different projects I am working on. So having the flexibility to switch phones outweighs the hassle of all the buying and selling.

          3. I’m not following you.
            Assuming you don’t change carriers… You’re paying the new phone subsidy. If you get a subsidized phone, what’s to prevent you from selling when you want to change phones.

          4. The monthly charge is the same whether I get a subsidized phone or not so it is irrelevant. When I get a subsidized smartphone, the cost is normally around $200. When I buy and sell a phone, that is about my out of pocket cost so that is awash there too.

            The big difference is I can only get a subsidized phone once every 18 months. By supplying my own phone, I can change them as often as I want as I am not locked into a contract and don’t have to wait to be eligible for another subsidized phone. And if the service gets bad, I can always switch carriers.

            As I said, what I do is not for everyone. Because of my line I work, it is helpful for me to be able to switch models every few months. In the end, the costs are about the same and I am not locked into a phone or carrier.

          5. Except of course, you pay for a new phone subsidy that you never reap any benefits from.

          6. I guess that is all how you want to look at it. Because the monthly fee is the same regardless of what type of subsidized phone you get or don’t get (a non-smartphone costs less to the carrier to subsidize than a smart phone, even after any amount charged to the customer), you can’t determine how much is for subsidizing. Just like part of the monthly charges paid by a user covers 4G data even if you don’t have a 4G phone. There are all sorts of costs built into the monthly fee for services you many or many not use or even have the ability to use. You still have to pay them anyways.

          7. So I finally understand why you are doing this unique method. Consider, carriers used to have a standard early termination fee. For Verizon it used to be $350 for the 2 year duration of the contract. That’s about $15 a month. We can use that number as the new phone subsidy fee for simplicity

            If, in month 1 you want a phone, you can get a new phone for $200 and have a contract or a subsidized phone for the same price, no contract. 3 months later you want a different phone. If you are remaining with the same carrier you can sell the either the new or used phone, buy a used phone, and continue on, getting a new phone when eligible, but otherwise purchasing used phone.

            As I see is, if you were to avail yourself of the new, subsidized phone when eligible and buy used phones during the interim period, the equipment out of pocket wouldn’t change. Unless you changed carriers.

            OUTOFPOCKET = PURCHASEPRICE[purchased phone{s)] – SALEPRICE[sold phone(s)] + early termination fees

            If you don’t change carriers then Termination Fee = 0.

            So basically, you’re giving up $15/month in value for the ability to switch carriers at will. That’s what’s important to you, and of course it’s your money. It just took me a while to understand everything.

    2. The poll question today didn’t seem to apply to the customer’s case. My answer is “It depends.” I bought my HTC no-contract phone from Virginmobile, and pay a fee of $35 monthly unlimited text and data, 300 talk minutes a month.. If all you want is an emergency phone, but still want a smartphone, this is a good way to go.

    3. I switched from Verizon to Virgin Mobile back in January. Including the cost of all the replacement smart phones, I’m already saving money over the old contract. I have no contract and can leave or change phones at will.

    4. I’m willing (and wanting!) to pay the full, unsubsidized price for the phone. In exchange for lower monthly service costs and the ability to change carriers when I’d like.

      In fact, I’ve paid full price for each of the last two phones our family has bought. Contract-free is the way to go!

        1. That’s been my biggest reason for upgrading phones the last two times, I’ve upgraded. AT&T Charges me the same whether I keep my old phone, or get a new one, so why not go ahead and upgrade?
          Now if they offered me a financial incentive to stick with my current phone, I’d absolutely have to think about it a little more…

    5. The funny thing is I bought my iPad at retail price, same with my TVs, computers and everything else electronic I own other than my cell phone. I’m not exactly sure when it came about that reduced cost cell phones were the norm while everything else was the consumer’s responsibility to cover the whole cost. In all seriousness, why isn’t my cable company offering me a free TV every couple years? Or my internet provider selling me a laptop for cheap?

      1. The consumer covers the entire cost regardless. The only question is whether the consumer pays all upfront or over time. On Verizon, if you have a tablet (which are not subsidized, you pay $10 month for access. If you have a cell phone, you pay $40 which includes the subsidy recapture.

        Also, by spreading the payments out over time, it locks the customer into the service which is the real money maker for the cell companies.

    6. I am completely comfortable with that. I have bought my last 2 iPhones a 4S and a five off contract and unlocked. They were around $800 each at the time.,and I don’t have. Single regret. I travel internationally a lot and when I get into a new country I just pop a local SIM card in. I use prepaid auto refill service and minutes, and I have no interest in paying monthly fees for a cell phone plan I’m not using when out of country. When their phone 6 comes out I will buy one immediately upon release.

  10. Ok, can we stop using “bullying” in these situations? I know, I know, it’s the hot “feel sorry for me” buzzword right now, but grow up already.

    This isn’t middle school and some kid is snapping your bra or putting glue in your hair or something. It’s a stupid cell phone contract.

  11. I voted yes, but with a caveat (not that I can put a caveat in my vote), that as long as they subsidize the cost of the phones I have no problem with them charging an early termination fee. However, what I would like to see is them stop subsidizing the cost of the phones and then charge a lower monthly rate with no contract. Sadly I don’t think that will work in the US as many people want things now without saving up first, and from what I have read about the industry in the WSJ, the US Cellular providers have enormous amounts of bad debt and a huge portion of their business is spent collecting these early terminations fees and past due bills because people sign up to get the phone and then just stop paying and really don’t care much about their credit. Because of all the outstanding receivables and the amount of work to collect it, the US Cellular providers don’t want to reduce the monthly rate, as the people who pay their bills are covering the loss of those who don’t.

    I have a friend who lives in Ireland and he bought an iPhone for 450 Euros (About $600), and pays 30 Euros (About $45) a month for unlimited talk, text, and high speed data and said it works through most of the EU. Even if I took the full price of my iPhone divided over 24 months and added it to $45 a month, it’s still less than I pay per month in the US and I only have 700 minutes (Probably because in the US I am subsidizing people who don’t pay). If people don’t pay their bill, the European provider doesn’t loose any money on the phone and quickly shuts of their service. The European companies don’t have huge amounts of un-collectable receivables. Now that’s a model I would love to see here!

    1. Your Euro plan just described exactly what Straight Talk is offering right now. You can stroll to your local Wal-Mart, put several hundred down on the counter, and walk out the door with an iPhone, no contract, and $45/mo unlimited everything.

        1. From what I found so far from their website, Straight Talk does not offer LTE, their unlimited plan has a 2GB soft limit (Not sure what that means), and their international roaming only adds service in PR (Which is actually part of the US and not international).

          Probably won’t work for me as I go international frequently, and I am a heavy data user. I use work apps and can easily go over 1GB in a day and the LTE has made it so much faster and easier. Also, I would only be saving $20 a month if I switched, which is basically the subsidized value of my phone over 2 years. So it would cost me the same amount over time for lesser service.

          Do you know if the phones can talk and use data at the same time? Because I do a lot of conference calls where that is necessary and unfortunately, AT&T is the only provider that I know of that allows that and has LTE.

          1. I can do both talk and data at the same time on my Sprint Samsung Note 2 and previously on my Evo 4G LTE phone.

          2. That’s good, but does it have LTE because they said they don’t. And what is the 2GB soft cap?

          3. Both phones are LTE. You would need to check with Sprint to see if they have LTE coverage in your area. Sprint has unlimited data so there are no soft or hard cap. My guess as to what the soft cap is would be once you go over the cap, they slow the data rate down.

          4. I called, they said they provide a SIM based on who has better coverage in my local area, however their service is not authorized to use LTE on any of the carriers networks, they said that their SIMs are capped at 3G on all networks. However, if I bring over my AT&T SIM, I can use HSPA, which is faster than 3G, but no where near as fast as LTE. That really stinks. So they offer LTE phones, but you can’t use LTE data.

          5. I think there may have been some confusion about my reply. I was responding to your question about anyone other than AT&T providing talk and data simultaneously. Sprint offers that on at least two LTE phones I know of. This would require you to have Sprint service. Because you mentioned calling about SIM cards, I’m guessing that was not a call to Sprint since their phones use CMDA (no SIM card). The phones with SIM cards use GSM and the two are not compatible.

          6. Oh yes, sorry, I meant on Straight Talk. I was asking if they offered talk and text simultaneously. They are the ones who said they don’t offer the full LTE which is unfortunate as I was ready to switch when my contract ended. As soon as they offer unlimited data at LTE I will switch.

          7. In exchange for the lower monthly rate, you have to give up something. In this case, it sounds like data speed.

            Sprint has a couple unlimited plans for like $80 or $100 a month. I know that is a lot more, but to get unlimited data and LTE, it’s going to cost more than $45 a month.

          8. I was just looking for something more like what they have in Europe. Right now I am grandfathered in to AT&T and paying $65 a month for unlimited LTE, unlimited text, and 700 min voice. Every two years they subsidize a new phone if I renew my contract, and they have yet to make me switch from my old terms. I always get the new phone because they won’t lower my rate if I don’t, so its a waste of money not to. So if I switched to Straight Talk, I would be paying $20 less a month, which is about the value of my phone credit, so its even money for me, but straight talk would give me less data, though I would save money if my phone lasts longer than two years. Ill stick with what I have now. I like that in Europe, I could do the same thing with unlimited high speed data. Hopefully it will come here soon too, and then I can keep the phone longer than 2 years and start saving more money.

          9. “Soft cap” = your data still works after you hit the cap, but your speed is dialed back to the Edge network. Not a big deal if you primarily use WiFi to send/receive data, but it sucks if you travel a lot.

          10. That also stinks for me as I travel (In the state now instead of notationally) and usually cant get on WiFi at work sites, and my work apps don’t work on Edge. Too good to be true for me I suppose.

  12. This seems to be the age old argument. It shouldn’t be a termination fee, it should be an equipment subsidy payment.
    This amount should diminish each month based upon how much of the equipment subsidy has been amortized.
    Adding a compatible phone that is not subsidized should not require a new contract – and I don’t think it does, it is just a change of hardware. Maybe the rep is misinformed.
    As long as consumers want free or cheap phones, this problem is going to persist.

    1. Verizon uses a ‘locked’ SIM card, so (unlike T-Mobile or AT&T), you cannot simply switch a SIM into a new phone and go. On Verizon’s network, the SIM needs to be associated with the phone’s IMEI number and activated in their database in order to access cell tower signals (at least for non-emergency calls). They even charge an “activation fee” for the ‘service’ of associating the SIM with the IMEI in their database, which is a completely automated process.

      Don’t get me wrong, this sort of system is total crap. A new phone shouldn’t require activation or a new contract–the hardware used should be divorced from the service provided. But that’s why I don’t use Verizon.

      1. Verizon doesn’t use SIM cards. They use CDMA and that doesn’t use SIM cards. GSM carriers (like AT&T and T-Mobile) do use SIM cards. The lock on the Verizon phones is in the code in the phone itself. Back on January 16th, the Library of Congress (don’t ask me why these people get the say) ruled that unlocking a cellphone purchased after that day would be illegal – a violation of the DMCA. Most Sprint phones are also locked. The Nexus phones by Google are not locked and you can use the CDMA version on either Verizon or Sprint, but unlike the SIM based GSM system, you have to get the carrier to link the phone into their network.

          1. Only their world phones that have both GSM and CDMA radios. The SIM cards only work when roaming internationally, not in the US.

          2. That used to be true. Not anymore.

            I have a Samsung 3 which I had accidentally screwed up the SIM Card. I had to go to the store where they switched out the SIM card and reactivated the phone.

            I also have an Ipad 4 which I purchased from Best Buy this January. The salesman screwed up the transaction somehow. He associated the SIM card with the wrong phone line. The verizon phone rep told us that the system would not permit the SIM card to be be associated with another number for 24 hours. The manager came and swapped out the SIM card with another unit so that I could use the tablet immediately.

          3. Verizon uses CMDA in the United States which do not use SIM cards. Because Verizon uses a hybrid model, having both radios, they can do some funky stuff with them and utilize the SIM card. But the card itself is not needed to work on CMDA. Verizon can put their own special touches on the phone’s software so that if an invalid SIM card is used, it won’t let the phone onto the network. But that is a Verizon restriction and not the protocol. Because of crap like this by the carriers, they need to be removed from the phone business.

            One other recent Verizon “feature” was when they disabled to use of Google Wallet on their phones claiming it was because of a security issue. It had nothing to do with the fact it competed with a payment system they were working on rolling out. Yeah. Right.

            It is because of crap like this I will not use Verizon.

      2. Nothing is stopping you from buying an unsubsidized phone. If its subsidized then the seller has every right to recoup the subsidy.

  13. Early termination fees (up to a point) help recoup the cost of the subsidized phone. WalMart has a month to month inexpensive plan but you buy the phone. A iPhone can cost ~$600 or so but plan is $40 a month, AARP has several deals, and you could always get a Trac fone for $10 and $20 for min for 3 months if you only need an emergency phone. That said the fact that it came up as a surprise to her is an issue with how Verizon took over the account. Almost no one reads the entire contract or agreement on a web site. Plain English in large bullet-ed points might help. A sliding scale on early termination when you sign up should be required so the consumer can make a judgement.

  14. When my Verizon phone breaks, I just order another one (usually identical model) on EBay. Older phone models (both new and refurbished) are available at very reasonable prices. And there are instructions on the Web for activating a new phone without contacting Verizon. Not 100% sure this will work in all cases, but I’ve had no problems (and I’ve been “off contract” for years).

  15. I couldn’t vote in this one simply because there wasn’t a “It depends on the reason” choice.

    For this customer, there were valid reasons for leaving. They were being forced into a new contract, with higher rates than they were currently enjoying, simply because a phone broke.

    When my mother died, Verizon tried to charge an early termination fee to the account. Sorry she passed away, Verizon, but she really doesn’t need the phone any more. It took my sister about six months to get it removed, and even then it took a letter from the estate attorney threatening action if they didn’t. Even in death, Verizon doesn’t like to let you out of your contract.

    However, there are some people who leave their cell contract simply because they can. So, yes, they should be able to charge a termination fee, but only in instances where there’s really no good reason to do so.

  16. Just so you know Chris, the following is no longer accurate,
    “But here’s something Verizon didn’t tell you: As a way of roping you into another contract, the company will as a matter of policy insist that you sign a new contract if you make any kind of changes to your wireless plan. And that includes getting a replacement phone, in your case.”

    Verizon has not required the extension of a contract for service plan changes for at least 3 years. The only time your contract extends these days is when you purchase equipment at a subsidized rate.

  17. I would like to see the Cell Phone industry move towards a model like Appartment Rentals:
    All Plans require you to either Pay for the Phone Up Front, or Finance the Phone through the carrier over a period of time. You would be responsible for paying this regardless of the type of plan you are on.
    Month to Month – High Monthly Rate, No Termination Fee
    Short Term – 6-12 Month Contract, Termination Fee = Discounted Amount not paid throughout the life of the contract, 5-10% Discount off the Month to Month plan.
    Long Term – 12-24 Month Contract, Termination Fee = Discounted Amount not paid throughout the life of the contract, 15-20% Discount off the Month to Month plan
    Treat the Phone Payment and the Service Charges as separate Line Items, and once the phone is paid off, that line item disappears. But give the customer choices on locking into service agreements or not…

    1. I would like to see carriers move away from doing anything with the phones period. Let me buy my own phone then pick the carrier with the best plan for my needs. I have gotten so fed up with all this carrier bloat-ware they install on phones that I am only using Nexus phones from now on. I keep reading stories about some carriers not going to carry a certain phone. Currently I am seeing questions asking if Verizon will carry the HTC-One. Do like the government did when the broke up AT&T. Customers were free to buy whatever phone from whomever they wanted and AT&T just provided the connection to the phone network.

      1. I’d tweak it a little. All cell phones should work on every carrier. Then once your subsidy is up, (or anytime if you don’t take a subsidy) you can take your phone to any carrier

        1. You’re basically saying all phones should be unlocked. The only reason phones are locked is because the carriers are involved and don’t want you to take the device to another carrier. There would be no locks if the carriers weren’t involved to start with.

          1. But isn’t that what you’re advocating. Buying a cell phone and being able to use it on the carrier of your choice?

  18. Why doesn’t the LW just buy a used Verizon phone (craigslist? ebay? beg on freecycle?) and activate it on her account? Whenever I’ve broken my phones, I’ve always been able to switch my number to an older phone – no need to buy a new one! The VZW rep who said that it wasn’t possible to buy an out-of-contract phone was lying.

    1. Because, as explained in the story, Verizon would not let them without signing a new contract on a more expensive plan. Based on other comments though, it sounds like they were given incorrect information and they should have been able to provide their own equipment without a new contract.

  19. You can buy a new phone and do an ESN swap without having contract problems… we’ve done that multiple times with Verizon. I’m unclear why they didn’t explain that to you.

  20. Just a helpful hint. I kept my unlimited data Alltel family share plan 500 when I upgraded to my new iPhone 5 with 4GLTE yesterday with a hotspot plan that’s unlimited too. The trick was this. I have 4 lines on my account. 2 had an upgrade available. I upgraded 1 line and had to put it on a new Verizon plan (2gb) with the iPhone 5. I then moved the iPhone to my main line with the unlimited plan still in effect and put my old phone on the 2gb line. I called *611 and asked for the personal hotspot on my main line with the iPhone 5 and was told that Alltel customers could add an unlimited hotspot for 30 a month. So I did it. So now I have a new iPhone 5 on my unlimited plan with 4gLTE speed and an unlimited hotspot to boot. I got rid of my cable Internet at home now since I can hook my phone to my router. The best part is no throttling. So it can be done if you have other lines on your plan you can use to switch out to a new phone with a discount price.

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