Lots of folks are up in arms recently over the secondary ETF (Early Termination Fee) imposed by Google on those who purchased the Nexus One with a T-Mobile contract and then cancel the contract early. It has been ‘discovered’ that if you do so, you’ll pay T-Mobile’s termination fee of $200, as well as a $350 termination fee to Google, if you cancel your contract within 120 days.
You know my thoughts on ETFs to begin with. If you don’t want to pay it, don’t sign the contract, or just keep your commitment. I’m really surprised that people are so up-in-arms about this, too, honestly. In case you didn’t know, here’s two reasons for the Google ETF:
1. To prevent you from screwing them. You can buy the Google Nexus One for $530 without contract, or for $179 with a T-Mobile contract. If you cancel that T-Mobile contract, you’re in for $200, which is still $379 vs $530. Thus, Google’s additional $350 makes it so that it’s cheaper for you to just buy it unlocked in the first place, $729 vs $530.
2. Believe it or not, Google gets a commission when you sign up with T-Mobile. If you cancel or modify that contract within 6 months of activating it, T-Mobile has the ability to charge the commission back to Google. This is why online cell phone retailers such as WireFly and LetsTalk don’t let you mail in their rebates for 181 days (6 months + 1 day), and require you to keep your plan the same until then – to secure the commissions that made it possible for them to sell you the phone so much cheaper.
Thus, if you sign up for a new T-Mobile contract on your Nexus One, and then break it, Google is not only out the difference in cost from the unlocked model to the locked model, but they’re out the commission that made the price difference possible. Hence the additional ETF.
Last, I hate to sound like a broken record, but if you don’t like it, don’t sign the contract. T-Mobile is one of the few carriers in the country that allow you to easily sign up for service without a contract, provided you bring your own equipment. If you’re so against contracts and ETFs, then don’t agree to them. Of course, you won’t get the handset so cheap, but then again, you’re unwilling to commit.
A similar instance is apartment complexes. They typically offer you a specified monthly rate, provided you agree to a multiple-month contract. The month-to-month rate, where you haven’t committed, is higher.