Ouch: Nexus One Has Double the Termination Fees

Another day, another Nexus One brouhaha. This time it's over the revelation that if you purchase the phone with a T-Mobile account and cancel your service within a certain time window, not only do you pay an Early Termination Fee (ETF) to T-Mobile, you pay one to Google (NASDAQ: GOOG) as well.

If that's not hard enough to swallow, the size of the fee surely will be. The T-Mobile ETF is $200 and Google's is $350. Combined with the $179 for the initial purchase, that puts Nexus One buyer's remorse at $729. All for a device you can't pick up and play with in a retail outlet (it's only sold via a special Google Web site)

Here’s a snippet of the legal mumbo-jumbo from the Nexus One’s terms of sale:

You agree to pay Google an equipment subsidy recovery fee (the "Equipment Recovery Fee") equal to the difference between the full price of the Nexus handheld device without service plan and the price you paid for the Nexus handheld device if you cancel your wireless plan prior to 120 days of continuous wireless service. For example, if the full price of the Nexus handheld device without service plan was $529 USD and the price you paid for the Nexus handheld device was $179 USD with a service plan, the Equipment Recovery Fee you pay will be $350 USD in the event you cancel within the first 120 days of carrier service.

The Equipment Recovery Fee is equal to the line item in your confirmation email setting forth the discount on the full priced Nexus handheld device related to your carrier service plan activation. You authorize Google to charge the Equipment Recovery Fee directly to your credit card, or other payment method used to purchase the Nexus handheld device, upon cancellation of your wireless plan. You will not be charged the Equipment Recovery Fee if you return your Nexus handheld device to Google within the 14 day Return Policy period as set forth below.

Not surprisingly, this is causing quite a bit of outrage on some blogs. "WTF? was the most common reaction of readers to an article on Phandroid, while MobileCrunch took the more humorous approach of "Prepare the foot soldiers from the Internet Nerd Rage army for this one."

Google, however, is sticking by the policy.

"Google provides a subsidy for devices purchased with T-Mobile USA service. If a consumer cancels service after 14 days, Google recoups this subsidy in the form of an equipment recovery fee. After 120 days, the equipment recovery fee will no longer apply. This is standard practice for third party resellers of T-Mobile and other operators, and you will find similar policies for other mobile service resellers," said a Google spokesperson in a statement e-mailed to InterentNews.com.

Avi Greengart, research director for consumer devices with Current Analysis, is willing to cut Google some slack.

"If you look at cell phones in general, there are always fine print restrictions. Google is not alone in this and in some ways it is understandable that you don't want to start shipping out devices and don't want people to trash them and ship them back. You can't sell it as new at that point," he told InternetNews.com.

He has a point there, as the Terms of Sale specifically say "You may not cancel these Terms and return a Device that has been engraved with a personal message of any sort regardless of where you reside." The Nexus One has a plate on the back designed for engraving, so a customer can engrave their name into it.

Like a restocking fee

Greengart considers this a restocking fee, similar to what retailers would charge if you return an expensive piece of consumer electronics, although in that instance, the fee is 15 percent of the price.

"If you are going to do something where the only way to experience it is to order it, you should give people a 30-day money back guarantee where there is absolutely no risk. Google is not doing that but this is the first time Google has done something like this and I'm sure this will be a learning experience for them," he said.

Andy Patrizio is a senior editor at InternetNews.com, the news service of the internet.com network.


Google, Android, mobile, nexus one, T-Mobile