Report says Nextel waived early termination fees for the government
By Joshua Topolsky 
posted Jun 13th 2008 3:14PM
posted Jun 13th 2008 3:14PM
Want to get around those costly, annoying fees the telcos hit you with if you break your cellphone contract early? Get a job with the US government. According to internal emails from Nextel which were uncovered by the Associated Press, the company debated whether it could charge the folks in power early termination fees (ETFs), with then-vice president Scott Wiener arguing that "the government will never, never accept such penalty amounts." Nextel ultimately decided to forgo the charges for Uncle Sam, while continuing to bilk its average users without as much as a batted eyelash. The FCC is currently taking a look at the fee situation -- let's see if they can give end users a fairer shake than the providers.[Thanks, Travis]
So the government will spend billions on a war, thousands on hammers and other supplies... but Nextel is afraid (without even negotiating or talking to them) that they won't pay $175 to cancel or move carriers?
Riiiight.
No, it ensures they will *become* customers. There are several points in play here.
First of all, it shows flexibility on the part of the vendor. This is important to a large entity. When a vendor is inflexible, they are perceived as being problematic, and are less likely to be selected or renewed.
Remember also that it is not an inexpensive consideration to move to another provider. The customer does not get these phones for free. A Blackberry may cost $300 each with accessories, and 8000 of those get very, very expensive -- that's $2.4 million. The selection of those phones means that they're limited in who they can transition to, if anyone.
In addition, transitions themselves are never fast affairs. Changing providers and keeping the same phones is usually a nightmare. Transitions usually take place over time -- sometimes years -- as old phones are replaced with new ones. My workplace used Nextel for many years, but has fragmented since with Sprint, AT&T, and Verizon contracts showing up. This started happening more than two years ago, and we're still not sure of the final direction.
That was intended as a reply to badqat below. :: sigh ::
Just checked with TMO if you have that goverment discount ... No ETF ... I work for DHS
that is simply outrageous for nextel subs like myself(especially subs like myself that are trying to get out and go with a more reliable servicee like southern linc). i hope the fcc shuts down nextel june 23rd like promised. do you what i'll be saying? i'm going to sue sprint for the equipment i paid hundreds for(phones)and i'm going to go to southern linc. again, this is insane, and its even more infuriating that instead of charging them and risking having e.t.f.s brought to the attention of uncle sam, they just decided to give the old coot a break. this stinks.
The FCC will not shut down the Nextel frequency sets that are covered by the agreement for two reasons:
1. They can (and will) assess fines on Sprint for not shutting them down, which Sprint will likely just pay after some legal saber-rattling.
2. There are a LOT of public safety agencies (police, fire, rescue, etc) that still rely on the PTT functionality Nextel provides. Shutting them down could result in lawsuits over risks to public safety.
Why does this surprise anyone? The government probably has 10s of thousands of mobile phones. Large corporations of this size probably do not have to pay ETFs either. Neither does anyone who buys their device at full price, at least with most providers..
Would you rather pay more taxes because the government is getting charged ETFs?
I don't think anyone is advocating higher taxes - but plenty of folks would like to see the carriers treat every customer equally. If they don't charge the federal government ETFs, then why charge individuals ETFs?
Because the larger subscribers have a lot more weight. If you choose to go to another provider, that's $960 they lose for the year (figuring $80 average bill). If a business or government subscriber that has, say, 8000 phones (using a local example) chooses to go to another provider, not only is that nearly $8 million lost, but the other provider may be able to use it in a sales pitch.
Ok, so the lack of an ETF for these larger customers somehow ensures they'll stay customers? I'd think not...and that it would give these larger customers more than enough reason to ditch a provider...
People only use Nextel for the direct connect feature...other than that, they have no killer app, phones, service, etc. But that one feature keeps a lot of customers in line...not the lack of ETFs.
Here in the rocky mountain west 10 local state governments formed a purchasing contract with all the wireless carriers and none of them charge ETF. What's the big deal?