The Federal Communications Commission Tuesday sent letters to AT&T, Google, Sprint Nextel, T-Mobile and Verizon asking for more information on their early termination fees (ETFs).
The letters, said the FCC, follow its announced creation last week of a consumer task force.
ETFs are the fees companies charge customers for cancelling service before the end of their long-term contracts.
In the letters, the FCC says it recognizes companies "may" have "various rationales" for the fees but says as an issue of transparency and consumer information, the commission wants to get the same set of information from each company on how they inform their customers about the fees. "These fees are substantial (and in some cases are increasing) and have an important impact on consumers' ability to switch carriers," wrote Joel Gurin, chief of the Consumer and Governmental Affairs Bureau and Ruth Milkman, chief of the Wireless Bureau. " We therefore believe it is essential that consumers fully understand what they are signing up for-both in the short term and over the life of the contract-when they accept a service plan with an early termination fee."
The FCC has been eyeing the consumer impact of ETFs since the days of Kevin Martin's chairmanship, but attention was focused on the issue in December when Verizon got a letter from the FCC's wireless bureau after it raised its fees on some advanced devices. The company also took some heat from Commissioner Mignon Clyburn in a strongly worded statement and from FCC chairman Julius Genachowski in a joking but pointed reference during the Federal Communications Bar Association dinner.
"I commend the Commission staff for its ongoing and proactive examination of the consumer experience in the wireless marketplace," said FCC chairman Julius Genachowski in a statement announcing the letters, which can be viewed here. "This inquiry is the first action by the FCC's Consumer Task Force, which was launched last week to tackle these kinds of issues. I look forward to reviewing the responses to the letters and the recommendations from staff regarding next steps."
Verizon pointed out in its response to the FCC that the fees are tied to term contracts whose lower equipment and access prices are based on a commitment to a long-term rather than a month-to-month contract. Those term contracts promote broadband deployment, Verizon argued, by lowering the up-front costs to consumers.
It also pointed out that the FCC in 2003 ruled that early termination fee provisions could be included in contracts, saying it did not want to "prevent carriers from collecting any outstanding fees or charges from consumers pursuant to traditional contractual remedies."