Wireless

Beginning Nov. 15, Verizon subscribers looking to get out of their smart-phone contracts early will pay $350 for the privilege. That early-termination fee is double the current one, but Verizon insists it's justified because of the higher prices of today's phones.

"The cost of smart phones is considerably higher than feature phones for which the early termination fees were created years ago at $175," said Verizon spokesman Jim Gerace. He added that the new $350 ETF declines by $10 per month through the life of the contract and customers can avoid it by buying their devices off contract and paying full retail price.

(Credit: All Things Digital)

An interesting move for Verizon, which just last year agreed to pay $21 million to settle a class-action lawsuit filed by California consumers over the very early-termination fees it is now increasing. The plaintiffs in the suit alleged that Verizon's ETFs were illegal under California law and that they were designed to unfairly lock consumers into long-term contracts and prevent them from switching carriers. When Verizon settled the suit, it denied any wrongdoing, insisting that early-termination fees are simply a means of recovering legitimate costs. And to some extent Verizon does have a point.

Full retail price for the Motorola's new Droid is $559.99. With a two-year contract, Verizon sells the handset for $199.99. Theoretically, that's a $359.99 subsidy (I have no idea at what price Verizon purchases Droid from Motorola). So if Verizon allowed subscribers to break their contract after a month without paying an early-termination fee, the company would stand to lose money. And subscribers who did so could subsequently sell the device online and potentially make a profit, though a small one.

So it's certainly understandable that Verizon and other carriers want to protect the subsidies they dole out for these new smart phones. And as noted earlier, Verizon's new ETF drops by $10 each month a subscriber remains under contract. But at this rate, subscribers are still bound to pay a $110 termination fee in the 23rd month of a two-year contract. The contract is nearly over, the subscriber obligation to Verizon almost fulfilled, yet the company can still slap its customers with nearly a third of the full ETF if they break it at that time.

By month 23 of a two-year contract, does Verizon really stand to lose $110 if subscribers decide to switch carriers? Doesn't seem likely if subscribers can walk away just a month later without consequence, taking their handsets with them.

Since Verizon is pro-rating the ETF, why isn't it doing so in such a way that it zeroes out by the end of the contract?

And isn't the fast pace of innovation in the smart-phone sector such that prices-for both component and device-are dropping so quickly that high ETFs aren't really justified? Remember, you can get Apple's iPhone for $99 today. When the iPhone debuted in 2007, it commanded a price of $499/$599, depending on model.

I've put those same questions to Verizon and will update here when I hear back. In the meantime, here's what Consumers Union policy analyst Joel Kelsey has to say on the matter: "When people want to switch wireless services, the biggest cost they face is early termination fees. These fees are designed to lock people into long-term contracts and stop them from getting better deals. Early-termination fees make the marketplace less competitive. Verizon's move is painful proof that it's time for lawmakers to crack down on these fees."

UPDATE: Verizon Wireless spokesperson Nancy Stark offers the following answers to the questions I posed above:

Your first question regarding the balance at month 23 or 24 assumes that, at that point, we have recovered all of our subsidy and up-front costs for every device. That simply is not so.

On your second question, while the pace of innovation plays a role in prices coming down somewhat, it also plays a role in driving up costs as more and more complexity that customers want is added to phones-from premium HTML browsers to high-resolution MP cameras with optical zoom; videoplayers; music players; dual processor chipsets; WiFi; very high display resolution, operating systems such as BlackBerry, Windows Mobile, Palm, Android-ALL with the added value (vs a desktop) of mobility, and ALL in one tiny device that ALSO allows you to talk to anyone from anywhere. phew! (by comparison, I recently paid $200 for a camera and all it can do is take pictures, and it has only middle of the road capabilities.)

But getting back to ETFs specifically. The most important point is that Verizon Wireless customers do not have to have an ETF at all if they do not want to. ETFs allow customers to have it either way: They can have no ETF and pay full retail for their device. OR, they can get a greatly discounted device by having an ETF.

Story Copyright (c) 2009 AllThingsD. All rights reserved.

Bert and Ernie shared space on Google's home page on Friday with an ad for Motorola's Droid, the Verizon Wireless smartphone that went on sale on Friday.

(Credit: Screenshot by Ina Fried/CNET News)

As the newsroom's biggest Sesame Street fan, I'd be remiss if I didn't highlight the tribute Google paid to the PBS show this week, on the occasion of its 40th anniversary.

On Wednesday, Big Bird's feet and lower body graced the home page, while Thursday saw Cookie Monster nibbling on the Google logo. On Friday, Bert and Ernie served as the O's in Google.

But Bert and Ernie had to share the home page on Friday, as Google also used a front-page link to tout the new Motorola Droid smartphone that went on sale at Verizon Wireless stores.

Although such promotional pitches aren't the norm for its homepage, Google has used them in the past to tout the Chrome browser as well as the first Android phone, T-Mobile's G1.

Big Bird's feet served as the "L" in the Google logo on Wednesday, as the search giant kicked off its tribute to Sesame Street.

(Credit: Google)

As for the Sesame Street "doodles," Google Vice President Marissa Mayer noted that "many Googlers grew up on Sesame Street."

"We're delighted to have partnered with Sesame Street to create this special series of doodles, particularly since we share the same values of education, diversity, and accessibility," Mayer said in a blog posting.

Lest anyone doubt my devotion to the show, here's a video interview I did with Elmo Live, when that toy came out last year.

Consumer demand for smartphones seems to be unstoppable.

In the third quarter, vendors shipped a record 43.3 million devices, up 4.2 percent from last year's third quarter and up 3.2 percent from this year's second quarter, says a report released Thursday by market researcher IDC.

(Credit: IDC)

Among smartphone vendors, Nokia still enjoys the greatest market share, according to IDC, with a 37.9 percent slice for the third quarter. ... Read more

Perhaps you are impressed with pilots who stealth-bomb unsuspecting parts of America. Like Texas.

You know, the pilots who frighten horses while delivering an explosive new device to American soil--the Motorola Droid. Well, perhaps, then, you are male.

Somehow, viewing Motorola's televisual covert activities leaves one with a troubling instinct that the Droid brand will be somewhat different from the iPhone. Somewhat more male, to be precise.

One of Apple's most brilliant and constant talents is to make its brand and the design of its products appeal equally to both sexes.

Apple's music is often sung by women. Apple's humor, in, for example, the "Get a Mac" spots, is the sort of subtle digging that makes men feel clever and women feel relieved that they don't have to spend even 30 seconds with a belching oaf.

In many ways, the Apple brand is the perfect toy boy. Looks young and lovely, lots of wit and versatility, and has just the right amount of muscle for other men to admire.

The Droid, on the other hand, seems to be setting itself up to be the peculiar love child of a union between Chuck Liddell and The Rock. It's strapping on its parachute and it's ready to thrust a fist in your face and a bomb into your back garden.

Is it any wonder that the cowboy in this new Droid spot stammers: "What in the world is that?"--as if he has just set eyes on an alien monstrosity whose GPS is on the blink?

The Droid, so far, is so male that the horses have bolted and the natives are in shock. It's a pillager that has already gouged vast craters out of American soil.

Will women gravitate to its charms? Or is Motorola carving an image for the Droid that consists entirely of chewing tobacco and gunning to the top?

Can a boy's toy take on the toy boy? Can one possibly wait until Friday?

T-Mobile said on Wednesday that a software glitch was to blame for a massive outage on Tuesday that left many customers unable to send or receive calls or text messages.

"After investigating the cause, we have determined that a back-end system software error had generated abnormal congestion on the network," T-Mobile said in a statement. "T-Mobile has since implemented additional measures to help prevent this from happening in the future."

The wireless service provider did not say which software caused the issue.

"We again apologize to those customers who were affected and may have been inconvenienced," T-Mobile said. I've also asked the carrier what, if any, compensation it plans to give those who were without service.

The service disruption began on Tuesday afternoon and lasted, for some, until late into the evening Pacific Time.

T-Mobile has stated that the outage affected about 5 percent of its users.

T-Mobile customers are still seething after a major outage on Tuesday that left many people across the country unable to text and call their friends and business associates.

The outage, which started Tuesday afternoon and lasted through the evening before being resolved, affected a wide swath of users, though T-Mobile said that only 5 percent of customers were affected. T-Mobile has yet to say what caused the problems.

"Our sole focus during the service disruption on Tuesday was to quickly restore normal service to affected customers," T-Mobile said in a statement on Wednesday. "We are now working to determine the root cause and facts surrounding the interruption."

After CNET News reported on the outage and asked readers to share their experience, dozens of e-mails poured in.

From a husband unable to connect with his pregnant wife, to small-business owners unable to reach clients, to people getting grief for seemingly ignoring text messages from their significant others, people wrote in with their grievances.

Electrician Casey French, of Flower Mound, Texas, said that the outage is a major issue for his business, given that he can't afford to sit in an office with a landline phone.

"This is a catastrophic blow to businesses like mine, losing a day or more of production means losing not only money, but potential new customers, which in this economy are extremely hard to come by already," French said.

T-Mobile, which confirmed the outage Tuesday afternoon, released an updated statement around 5 p.m. PST, saying that "some T-Mobile customers may be experiencing intermittent service disruptions impacting voice and some data services."

However, plenty of folks e-mailed me to say they were having more than intermittent problems.

Around 6:15 p.m., the company said it was making "good progress restoring voice and messaging service to affected customers." The company added that, "at this time, approximately 5 percent of T-Mobile customers are experiencing service disruptions."

From that point, though, another 50 people e-mailed me to say they were still having problems with their service--many saying that they had multiple phones that weren't working as well as friends who were also having problems of one variety or another.

Some questioned T-Mobile's 5 percent estimate, saying that nearly everyone they knew with T-Mobile was experiencing some sort of outage. (As of the second quarter, T-Mobile had 33.5 million subscribers, meaning that even if 5 percent of users were affected, that would still be more than 1.5 million people.)

John Bystrom, of Elk Grove Village, Ill., said he also doubted the 5 percent figure, given the number of people who packed a local store he stopped in to inquire about the outage. Bystrom said he had just switched from AT&T to T-Mobile to get the BlackBerry 8900, but now hopes to switch back to AT&T.

"Hopefully I can get out without being charged the fee since T-Mobile in my opinion has broken the contract first by not delivering a stable system," Bystrom said.

At 10:30 p.m., T-Mobile e-mailed another statement, to say that things had been resolved.

"T-Mobile confirms it has fully restored voice and text/picture messaging services for customers affected by intermittent service disruptions on Tuesday," the company said. "About five percent of our customers across various geographies were affected for much of Tuesday evening, and by late Tuesday PST their service was restored... We sincerely apologize for the inconvenience that this has caused our customers."

Some took issue with the way T-Mobile handled the outage.

"My frustration with T-Mobile is not that they had an outage, but the way they buried their head in the sand," said Carlos Ovalle, an architect in Long Beach, Calif. "They have just about everyone's email and could have notified us of the issue. Had that been the case I could have immediately notified customers that rely on being able to reach me at a moment's notice."

Clarence Barnes, a TV and radio host in Los Angeles, said he also objected to how T-Mobile managed the issue. "The problem for me was that if you called my phone, it would say 'The number you dialed is no longer in service'," said Barnes who is looking for full-time work after the radio station where he worked switched formats. "If you get that message it generally means that the person no longer has that number or simply didn't pay the bill--either answer doesn't make me look that responsible."

Tuesday's outage is the latest blow for T-Mobile, which is still working through a month-long ordeal for its Sidekick service, in which some customers have lost their address books and many more are still waiting to get back other data, such as calendars, to-do lists, and photos.

Of course, T-Mobile customers are not the only ones with cell phone issues. AT&T customers regularly complain about service problems with their iPhones. An outage last year interrupted service for BlackBerry customers on various networks across North America. Earlier this year a cut fiber line left many AT&T customers in Silicon Valley without service.

On Wednesday, T-Mobile customers by and large had their service back, but many were still looking for answers. Bystrom said that several hours after calling customer care he got a call back offering a $5 credit. "When I protested that it was unacceptable (I) was pretty much told take it or leave it," Bystrom said.

As Apple and Research In Motion have won a greater share in the Wi-Fi handset market over the past year, Nokia has lost share.

Though Nokia is still the leading vendor for dual-mode smartphones (Wi-Fi and cellular), its market share dropped to 35 percent in the second quarter, compared with 50 percent in the same period a year ago, according to a report released Monday from In-Stat.

The report "Wi-Fi in Mobile Phones: Dual Mode Becomes the In Thing" tracked the major Wi-Fi phone vendors, including Nokia, Apple, Research In Motion, HTC, and Samsung. Among those, Apple has enjoyed the greatest growth in market share, from 3 percent in the second quarter of 2008 to 20 percent in this year's second quarter.

Market share for both RIM and Samsung has also weakened the past few quarters, though less so than Nokia's. RIM's 15.7 percent chunk of the market for the second quarter of the year was down from its first-quarter high of 17.6 percent. Samsung's share has been relatively flat but usually dips a bit from the first to the second quarter, notes In-Stat.

In sheer unit volume, Nokia has done well the past few quarters, with 9.3 million Wi-Fi handsets shipped in the second quarter of the year compared with Apple's 5.2 million shipments. However, Nokia's shipments have dropped since the first quarter of 2008 when it saw 12 million units fly out the door. Over the same period, Apple, RIM, and HTC have seen their shipments grow.

As the No. 2 Wi-Fi handset vendor, Apple has also outsold third-place RIM in dual-mode phone shipments, says In-Stat. Though RIM still has a larger market presence, not all of its Blackberry devices include Wi-Fi. HTC and Samsung rounded out In-Stat's list as the fourth and fifth top Wi-Fi handset vendors, respectively.

(Credit: In-Stat)

The report also detailed the growth of the Wi-Fi smartphone market overall. The industry shipped 37 million handsets in 2007, and 103 million units in 2008. That rise is because of several factors, notes In-Stat, including greater functionality, lower prices, and carrier promotions. Initially targeted to the business market, smartphones are also now an entrenched hit with consumers, which In-Stat attributes to the success of the iPhone.

Wi-Fi handset shipments are expected to rise just 25 percent to 128.4 million units for 2009. That compares with a nearly 180 percent jump in 2008.

But In-Stat sees gains ahead. By 2010, the growth rate is likely to climb to 43 percent. Though that rate may not be sustainable, it should remain strong in the coming years. Wi-Fi will also become more prevalent in mobile phones. This year, 11.5 percent of handsets include Wi-Fi; by 2012, that figure will grow to 25 percent, predicts In-Stat.

To compile the report, In-Stat relied on its own data as well as interviews with Wi-Fi equipment vendors.

Helped by cost cuts and by growth in Internet and phone subscribers, Comcast on Wednesday reported a 22 percent jump in earnings for its third quarter.

The cable provider saw net income of $944 million, or 33 cents per share, for the quarter ended Sept. 30, compared with $771 million (26 cents per share) in the year-ago quarter. Sales also rose, hitting $8.8 billion, up from $8.5 billion in 2008's third quarter, though revenue was slightly below analysts' estimates.

Comcast's third-quarter sales

(Credit: Comcast)

For the quarter, the number of TV subscribers dropped 2.7 percent to 23.7 million from 24.4 million a year ago. But the loss was more than offset by gains in Internet and voice, two services that Comcast has marketed heavily, especially as part of its Triple-Play service.

The number of Internet subscribers rose 6.4 percent to 15.6 million, while Comcast phone customers jumped 20 percent to 7.3 million. Overall, the company saw a quarterly increase in customers of 3.4 percent to 46.8 million. Subscriber growth helped boost third-quarter sales for the cable segment by 2.8 percent to $8.4 billion.

Comcast Internet and voice customers grow.

(Credit: Comcast)

With a focus on trimming costs, capital expenses declined 6.1 percent to $1.2 billion, due in large part to lower spending at the company's cable divison.

"The strength and resilience of our businesses combined with our continued emphasis on expenses and prudent capital management helped us achieve healthy operating and financial results in the third quarter," Brian Roberts, chairman and chief executive officer, said in a statement.

Comcast revealed no new details over its intent to acquire a leading stake in GE-owned NBC Universal. Early last month, reports surfaced that the company wanted to buy a 51 percent chunk of NBCU, with GE owning the rest, to create a new joint venture. If it goes through, the deal could transform Comcast into a major media powerhouse, with control of NBC as well as variety of TV networks and cable stations.

Unsurprisingly, the iPhone 3G S is tops in touch-screen phones.

(Credit: CBS Interactive)

Market research firm ComScore reported on Tuesday that touch-screen mobile-phone adoption is not only on the rise, it's growing at a rapid rate.

Touch-screen phone adoption grew by 159 percent between August 2008 and August 2009, according to ComScore. The firm also found that by the end of August 2009, there were 23.8 million users with touch-screen mobile phones in the United States alone. In August 2008, just over 9.2 million people were using touch-screen phones.

But it's not just the touch screen that's enjoying strong growth. ComScore also found that smartphones are gaining traction across the U.S. Between August 2008 and August 2009, smartphone adoption grew by 63 percent. There were 20.7 million mobile subscribers using smartphones in August 2008. More than 33.7 million subscribers had smartphones by August 2009.

Unsurprisingly, it was the iPhone that led the way during that period. According to ComScore, the iPhone was the top touch-screen device for users aged 13 and older, capturing 32.9 percent of the touch-screen market. The LG Dare placed a distant second, accounting for 8.7 percent of the touch-screen phones in the wild. That device was followed up by the LG Voyager, BlackBerry Storm, and Palm Treo, which captured 7.8 percent, 7 percent, and 6.5 percent of the market, respectively.

It's also worth noting that the average user of a touch-screen device is younger than those who use standard mobile phones. According to ComScore, 51.4 percent of smartphone users are under the age of 35. A whopping 57.7 percent of touch-screen users fall within that age range. ComScore also found that 20.6 percent of touch-screen users range in age between 18 and 24. Less than 5 percent of touch-screen users are 65 and older.

Do you fall in line with these stats? Let us know in the comments below.