Verizon to hike contract-termination fees for 'advanced devices'

Verizon Wireless memo

According to a recent Verizon Wireless memo, obtained by The Boy Genius Report blog, the early contract-termination charges of the company, for "advanced devices," are being hiked to $350. The termination fee, applicable to one-year as well as two-year contracts, kicks in upon the discontinuation of the carrier's service before the completion the stipulated period.

In addition, the leaked memo also stated that the "advanced devices'" contract-termination fee will be reduced $10 for each of the months that a subscriber completes under contract.

Even as Verizon did not specify "advanced devices," Andrew Munchbach of Boy Genius Report has conjectured that these would essentially comprise netbooks and high-end smartphones that run on the carrier, including the forthcoming Android-based Motorola Droid.

Describing Verizon's move to hike of the termination fee as "outrageous," Josh Levy, of Free Press, said: "Early termination fees are universal across the industry, and they're universally detested by consumers. In fact, the average subsidy of a wireless handset in 2008 was $14.33, so a $175 fee is already more than 10 times the average subsidy. So what justification could there be for doubling the fee?"

Over the years, the wireless termination fees has been an issue of contention - while the telecom industry asserts that the charges help the companies recover the costs of producing, selling, and marketing the handsets; critics opine that the fees essentially bind the customers to a particular carrier's contract!