Canceling a two-year contract with Verizon for a smartphone or tablet just got a whole lot more expensive. Verizon recently changed the terms of its customer agreement to state that the carrier will not discount its early termination fee (ETF) until the eighth month of service, as first reported by Droid Life.
In other words, if you signed up for a new iPhone with Verizon in December, you wouldn't see a reduction in your ETF until at least July. Verizon previously discounted its ETF by $10 every month beginning with the first month of service.
The new terms only apply to new customers that sign up for service on or after Friday, November 14. Under the new terms, your ETF would reduce by "$10 per month in months 8--18, $20 per month in months 19--23, and $60 in the final month of your contract term."
The company's hefty $350 fee applies to what Verizon calls advanced devices, which includes smartphones and tablets. You can find a list of Verizon's advanced devices here.
The story behind the story: Verizon's $350 early termination fee has always been one of the most scrutinized among U.S. carriers. Verizon first upped its ETF to $350 in 2009, doubling the previous charge. That prompted the Federal Communications Commission to demand an answer about why the charge had skyrocketed. Little came from that inquiry and today Verizon is not the only carrier with a high-priced ETF.
The new normal
Sprint also carries a hefty $350 ETF for customers with a two-year commitment on a smartphone. Similar to Verizon, Sprint only starts discounting its ETF in month seven. AT&T's ETF is slightly lower at $325 for smartphones, and the company says it immediately starts discounting that ETF by $10 each month. With Verizon and Sprint moving away from immediate discounts, it wouldn't be surprising to see AT&T quietly follow suit in the coming months.
The exception to the ETF trend is the infamous "uncarrier" T-Mobile, which no longer offers two-year service contracts. Instead, the company offers monthly device payment schemes.
Contracts are so 2012
Whether or not Verizon's ETF is a problem for you depends on how likely you are to switch away from the carrier during your commitment period. But two-year contracts are far from the only option. Many of the major carriers, including AT&T and Verizon, are moving beyond two-year lock-ins to more flexible device payment plans that include early upgrade options.
Even if you do opt for a traditional two-year agreement there are other ways to escape that won't cost you a dime.
T-Mobile has a standing offer to pay off ETFs from its rivals if you switch to the carrier, and until January 15 Sprint will pay off your ETF if you come over from another carrier.