Google Instituting Its Own Early Termination Fee for Nexus One

Posted 01/12/2010 at 1:03pm | by Bart Salisbury

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Early termination fees (ETFs) are a pain. It’s understandable why they are necessary--cell phone carriers have to recoup the cost of a handset from those who weasel out of a long-term agreement. Whether ETFs are bogus or fairly priced are matters that can wait for later. What can’t wait for later is the new wrinkle Google has added to the ETF game--it’s charging its own ETF for the Nexus One--a fee that comes on top of the ETF levied by the carrier. Bail early on a Nexus One agreement and you’re going to get smacked-up on both sides of your head.

Google doesn’t call it an ETF, but rather an “Equipment Recovery Fee”. Here’s the relevant language from the contract: “You agree that the Equipment Recovery Fee is not a penalty but is for liquidated damages Google will incur as a result of such cancellation...Please note that the Equipment Recovery Fee is imposed by Google and not your chosen carrier and is in addition to any early termination fees that may be charged by your chosen carrier in connection with termination of your wireless plan prior to fulfillment of your chosen carrier’s service agreement term.” [emphasis in the original]

Google says that should you dump on your plan within the first 120 days of carrier service you’ll owe them $350--the difference between the $529 retail price of the Nexus One and the $179 charged with a service plan. Paying up will be easy, as Google will simply ding your credit card for the fee.

You can avoid the fee if you return the Nexus One to Google within the 14-day return period. And the language suggests if you hang on to the Nexus One longer than 120 days then you owe Google nothing. (Obviously, you could just pay full price for the Nexus One and avoid the problem all together.)

Why is Google doing this? Google hasn't yet commented. But, it could be that Google's agreement with carriers requires payment for the Nexus One only if the service lasts for more than 120 days. Cancellation during the first 120 days leaves Google in the lurch for the difference, which it will collect from you. After 120 days it's the carriers problem. This raises the question: what's the carrier's ETF during the first 120 days for, if not the handset?

Image Credit: CameraGeek 2.0/Flickr