Prepare the foot soldiers from the Internet Nerd Rage army for this one. Apparently if you buy a subsidized Google Nexus One and “cancel your wireless plan prior to 120 days of continuous wireless service,” you’ll be charged the difference between what you paid for the device and its full retail price of $529. So at its current subsidized price of $179, you’d pay a $350 early termination fee. That fee is paid to Google, by the way, “and is in addition to any early termination fees that may be charged by your chosen carrier.”
People are upset, naturally, as the point of a wireless provider’s early termination fee is to make up for the lost revenue from subsidizing a particular handset’s selling price, and being hit with two fees seems a bit out of line. As handsets get more and more expensive, though, we start to see people (for instance) buying a $600 phone for $99, canceling the contract right away, paying a $175 early termination fee, and then selling the phone on eBay for a tidy profit.
In light of such activity, we’ve seen Verizon raise its early termination fee on “advanced devices” to $350. This is likely the same rationale behind Google’s early termination fee, except that in the end you’d pay out more than the retail price of the phone.
Here’s a snippet of the legal mumbo-jumbo from the Nexus One’s 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. The Equipment Recovery Fee is equal to the line item in your confirmation email setting forth the discount on the full priced Nexus handheld device related to your carrier service plan activation. You authorize Google to charge the Equipment Recovery Fee directly to your credit card, or other payment method used to purchase the Nexus handheld device, upon cancellation of your wireless plan. You will not be charged the Equipment Recovery Fee if you return your Nexus handheld device to Google within the 14 day Return Policy period as set forth below.
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 in connection with termination of your wireless plan prior to fulfillment of your chosen carrier’s service agreement term.