Klobuchar derides new Verizon policy

Sen. Amy Klobuchar sent a letter to Verizon Wireless CEO Lowell C. McAdam this morning expressing her dissapointment with a recent decision by the company to double early termination fees for customers with smartphones.

That increase means that Verizon subscribers who use phones such as BlackBerrys could face charges of up to $350 for terminating their contract early.

"These fees are anti-consumer and anti-competitive and they bear little to no relationship to the cost of the handset device," Klobuchar said.

She also sent a letter to the FCC chairman, asking the body to review the decision.

In 2007, Klobuchar introduced a bill that would increase transparency for cell phone contracts and create more flexibility for consumers wishing to switch plans. The legislation never made it out of committee, however.

Klobuchar's full letter to McAdam is below:

Dear Mr. McAdam:

As you know, I introduced legislation in the last Congress – the Cell Phone Consumer Empowerment Act – that would encourage transparency, competition, and quality service in the wireless market. Among other pro-consumer measures, this legislation would require wireless carriers to pro-rate their Early Termination Fees (ETFs) so that, at a minimum, a consumer exiting a two-year contract after the end of the first year would have to pay only half of the termination fee.

Since introducing this legislation, I was pleased to see that Verizon Wireless and other wireless carriers implemented modest plans to pro-rate their ETFs. That is why I was so disappointed to learn that Verizon Wireless announced that it will soon double its ETFs and charge a $350 ETF for its new smart phones. Although Verizon Wireless will pro-rate the ETF by $10 a month, under the company's new plan, the penalty for leaving the contact halfway through a two-year contract would be $230 – still higher than the $175 ETF Verizon Wireless previously charged for these phones.

I remain concerned that ETFs – especially at these high prices – unfairly penalize consumers, bear little to no relationship to the cost of the handset device, and are anti-consumer and anti-competitive. In fact, Verizon Wireless' decision underscores the need for Congress to act and to pass the Cell Phone Consumer Empowerment Act.

I look forward to working with you as I seek to address these concerns.

Sincerely,

Amy Klobuchar