FCC digs deeper into cellphone fees

The FCC is asking more questions about those fees consumers have to pay to get out of their cellphone contracts early.

The agency today sent letters to AT&T, Google, Sprint Nextel, T-Mobile and Verizon Wireless, asking them specific questions about how and why they charge early termination fees, or ETFs. The FCC is particularly interested in how the companies inform their customers about their options.

"This is an essential step to ensuring that consumers have the information that helps them make informed choices in a competitive marketplace," the letter said.

The FCC recently asked Verizon Wireless why it decided to jack up the ETFs for some smartphones to $350. When asked about Verizon's defense of the policy, FCC Chairman Julius Genachowski said the company's response "raised more questions than it answered."

Today's letters also follow the agency's August truth-in-billing and disclosure inquiries. And it is the first action taken by the Consumer Task Force the agency launched just last week.

"This is one of the most rapidly emerging consumer issues that is defined by our notice of inquiry," said Consumer Bureau Chief Joel Gurin in an interview. "It's getting so much consumer attention that it was time to take a look at this and bring transparency."

The FCC is taking a hard look at the information available to consumers when they choose a provider, when they choose a cellphone plan, when they are reading the plan and when they are thinking of switching to a new carrier or plan. "This cuts across all four of those areas," Gurin said.

Most recently, new concerns bubbled up around Google's new Nexus One phone. If consumers decide they no longer want the phone, they have to pay a fee to both Google and the carrier, T-Mobile, Gurin said.

"Our understanding of Google's T-Mobile plan is that two ETFs are charged" when consumers want to leave, Gurin said. "Between day 14 an 120 after buying the phone, they have to pay $550."

CTIA, the wireless industry's main trade group, said it hopes the FCC realizes that the ETF fees are "part of the rate and rate structure that allows wireless carriers to, among other things, subsidize phone purchases."

Chris Guttman-McCabe, CTIA's vice president for regulatory affairs, said "all of the carriers that received letters from the FCC have multiple options when it come to choosing plans and device without early termination fees."