Google has dropped its “equipment recovery fee” for the Nexus One smartphone from $350 down to $150, a move that follows a government inquiry into the fees that are imposed on consumers who break their wireless contracts early, according to a Wall Street Journal report.
That’s nice - but I don’t think it changes anything about the perceptions surrounding those fees.
The fact is that consumers still face two separate fees. Google imposes one fee - now $150. And T-Mobile charges a $200 for breaking its service contract early. In a post last month, I argued that Google really should stick to making the Android technology better and leave the retail sales - and support - of this device to a carrier partner. I still think that’s true.
From an accounting standpoint, the fees make perfect sense. They’re in place to ensure that customers stick around long enough to essentially pay back - by staying on the customer roll for at least two years - the subsidy that allowed them to buy an expensive device at a discounted price.
But Google is going to stifle the adoption of devices running the Android OS - and that’s a shame because has a real winner here. If anything is going to challenge the mighty iPhone and keep Apple on its innovative toes, it’s going to be Android.
Yet, if consumers starting getting wind of this double-whammy on early termination fees, there’s a big chance that they’ll go another route when it comes time to buy, maybe Palm or Blackberry or, yes, even the iPhone.
I spent a month playing with the Nexus One and I had been really excited about getting one on Verizon when it’s released this Spring. But, now I’m thinking twice. If there were an option, I’d go directly to Verizon to buy this phone and re-up on my service contract. But if I’m forced to go to Google’s Web site to do this, it just might be enough to force me to rethink the purchase altogether.
