And if You Think $550 in Nexus One Early-Termination Fees Is Bad, Just Wait Until Verizon Gets Involved
Caveat emptor: Purchase a subsidized Nexus One from Google and you’ll pay dearly if you cancel service early. ComputerWorld notes that according to the device’s Terms of Sale, the search company charges an “equipment recovery fee” of $350 in the event users cancel service before 120 days have passed. This, in addition to the $200 early termination fee charged by carrier T-Mobile.
From the Nexus One Terms of Sale:
You agree to pay Google an equipment subsidy recovery fee (the “Equipment Recovery Fee”) equal to the difference between the full price of the Nexus handheld device without service plan and the price you paid for the Nexus handheld device if you cancel your wireless plan prior to 120 days of continuous wireless service. For example, if the full price of the Nexus handheld device without service plan was $529 USD and the price you paid for the Nexus handheld device was $179 USD with a service plan, the Equipment Recovery Fee you pay will be $350 USD in the event you cancel within the first 120 days of carrier service….
You agree that the Equipment Recovery Fee is not a penalty but is for liquidated damages Google will incur as a result of such cancellation. These damages may include, but are not limited to, loss of compensation and administrative costs associated with such cancellation or changing of wireless service provider(s), market changes, and changes in ownership. Please note that the Equipment Recovery Fee is imposed by Google and not your chosen carrier and is in addition to any early termination fees that may be charged by your chosen carrier [emphasis added] in connection with termination of your wireless plan prior to fulfillment of your chosen carrier’s service agreement term.
The costs of canceling a T-Mobile Nexus One contract within the first four months after purchase, then, are as follows:
- $179 USD, the purchase price of the device.
- $200 USD, the early-termination fee T-Mobile assesses for contracts canceled with more than 180 days remaining on term
- $350 USD, Google’s equipment recovery fee
Grand total: USD $729.
That’s $200 more than the cost of the device unsubsidized.
So if you’re unhappy with the Nexus One you purchased on contract, do yourself a favor and wait at least four months before terminating it.
What was it that Google VP of Engineering Andy Rubin said last week? Something about making the cellphone purchasing process simple and worry-free? If that really is the goal here, implementing ETFs that make canceling a Nexus One contract more expensive than the price of the unsubsidized device itself hardly seems a good way of going about it.
I’ve asked Google (GOOG) to explain the rationale behind its $350 equipment recovery fee and will update here if I’m given one.
UPDATE: This just in from Google:
Google provides a subsidy for devices purchased with T-Mobile USA service. If a consumer cancels service after 14 days, Google recoups this subsidy in the form of an equipment recovery fee. After 120 days, the equipment recovery fee will no longer apply. This is standard practice for third party resellers of T-Mobile and other operators, and you will find similar policies for other mobile service resellers.
The T-Mobile early termination fee is separate and handled by T-Mobile.