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Google Says Nexus One $350 'ERF' Is Necessary

Article Comments  82  

Jan 12, 2010, 4:12 PM   by Eric M. Zeman   @phonescooper

Google sells the Nexus One directly to consumers, with or without a T-Mobile contract. The Nexus One costs $529 without a contract and comes unlocked. In order to receive a subsidized price of $179 (for new customers), T-Mobile requires a two-year contract. It has come to light that customers wishing to break their Nexus One contract early will not only have to pay an early termination fee to T-Mobile ($200 in first 18 months), but also an "equipment recovery fee" of $350 to Google. Those who break their contract in the first 120 days will pay a total fine of $550, which is more than the full retail price of the Nexus One. Today, Google defended its ERF as a method to recapture some of the subsidies it gives contract customers. A Google spokesperson said, "This is standard practice for third-party resellers of T-Mobile and other operators." This $550 far surpasses Verizon's $350 ETF, and the $175 ETFs levied by other network operators.

more info at Wall Street Journal »



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Jan 12, 2010, 10:51 PM

Well, let's see...

...doesn't connect to Tmob's 3G service. And you'll get hammered with crazy ETF's.

Sounds like a bargain.
Mine connects to 3G just fine. As with any new device or service there will be hiccups. Lest we forget when the Iphone first came out all the issues that customers had getting them activated when you had to buy it at apple and get it activated through...
That's why they offer a 14 day trial period where you can calcel and return the phone with no penalty.

Reading comprehension. FTW

Jan 13, 2010, 12:10 AM

Man Up. Stop crying. And look at the facts people.


Everyone wants to cry foul about this policy, but its a very common practice on sites like For some reason google is getting hammered for this.

People keep asking: Why is the ETF higher than the total cost of the phone?

Heres why...

If you only paid the Tmob ETF, then google loses $350 based on the retail price of the phone ($530) and the subsidized price of $180. I don't think thats fair and scammers have the ability to get an unlocked "superphone" for $380 if they cancel immediately. Google would get screwed.

Now if you only paid the google ETF, Tmob gets screwed. You signed a CONTRACT stating that you would pay them a specified amount for 2 years. If you break that, Tmob loses thousands of dollars. ...
So is the ETF covering the device, or the service? Which one?

You pay the ETF because the carrier didn't recoup on the -phone subsidy.-

If you've paid for the phone subsidy, you don't owe the carrier squat beyond maybe an activation fee.
Plus...ppl only have to pay that if they don't return the phone. If you know you don't like it, cancel within your 14 days and return the phone. Problem solved. If ur gonna keep the phone, they are just making you pay the full cost like everyone else ...
Good post, I agree and don't agree with some of it though. If every manufactorer started doing this we would have a riot on our hands. This is kind of the price you pay for getting into the wireless industry. I think that if companies wanna minimiz...
It seems like your working on the assumption that Google is subsidizing the reduced price of the phone, not TMobile. Given that Google is selling the phone, I agree that's prob. how it works

In that case, I agree with you regarding Google. If you ...

Jan 12, 2010, 6:49 PM

Amazon charges $250

That's less, but if you buy a Verizon Droid from Amazon, Amazon will charge the $250 on top of Verizon's $350... that's $600 total.

To compare the Nexus $550 to Verizon's $350 alone is moronic. It's just a flat out lie really.
And again...if Verizon follows T-Mobile's example when the Nexus One comes them...then consumers will have Google's $350 ERF AND VZW's $350 ETF. This is all getting VERY interesting and I can't wait to see how it plays out,
Globhead said:
That's less, but if you buy a Verizon Droid from Amazon, Amazon will charge the $250 on top of Verizon's $350... that's $600 total.

To compare the Nexus $550 to Verizon's $350 alone is moronic. It's just a flat o

Jan 13, 2010, 3:31 PM

For those who DON'T Think it's ridiculous: Who is subsidizing this thing?

ETF Money is for repaying the phone subsidy. So is Google subsidizing the phone, or is T-Mobile Subsidizing the phone? It sounds like Google is (who likely gets a cut from the T-Mobile service plan.) Even Verizon's $350.00 ETF is because congruous with their subsidy.

T-Mobile loses out on "theoretical" dollars, but they're not entitled to that by cell-phone-contract standards. If I buy an LG Lotus from Sprint with the $150.00 subsidy my ETF matches the subsidy. Sprint doesn't get my 'theoretical' dollars, I just repay the subsidy amount.

So why is T-Mobile charging an ETF? It's not costing them anything other than theoretical dollars (beyond activating my account which I already pay $36.00 for.
show me a document from a cell company stating that an ETF is ONLY to recoup the cost of the device. Their are other revenues that are lost if you breach of contract besides the phone subsidy.

You get an N1 for $180, cancel a month later. Google ...

Jan 12, 2010, 7:09 PM

The Biggest question is why is the ETF or ERF or what ever, more then the cost of the phone?

Thats the only thing I'm concerned about. I understand everybody talking about if you don't want it blah blah blah.

I ain't trying to hear all that. I'm worried about why when you add up these ERF/ETF is it more then the Phone?
Because if you cancel between 15 and 180 days (varies by the carrier), the carrier will both charge you an ETF _and_ stiff the carrier on their commission. Thus, the dealer has to charge you for the phone so they don't lose a few hundred dollars.

Get a clue guy.

The charges are fair and easily laid out. If you don't like it, DONT GET THE PHONE!!! Or pay full retail.

Why is this an issue at all. Its a common practice in wireless and makes sense why you READ why its necessary.


Jan 12, 2010, 10:40 PM

Everyone just now noticed?

How did half the world just now notice retailers charge their own ETF? Has nobody ever heard of an indirect dealer? Every indirect has the same policy but now everyone is pissed off that google is doing this as well. Everyone who is upset please just go back to your normal ways and blame Bush/Government/apple/windows/religion/etc. This has been going on for YEARS so stop your yappin and hold up your end of the contract.

1. Customer signs up with indirect kiosk in mall
2. Indirect discounts phone
3. T-mobile pays dealer for the contract they sold.
4. Customer breaks contract within xxx days.
5. Indirect charges customer ETF
5. T-mobile charges Indirect for breach of contract, T-mobile charges customer breach of contract.
Although I knew authorized agents had their own contract, it had really just now dawned on me that many of these carriers tout that they only do contracts if you subsidize a new phone. Im curious at what the exact verbiage might be.

I do agree tha...

Jan 13, 2010, 7:02 AM

think about it this way

as annoying as it is with all the ETF think it this way.

at least you can get a good phone unlocked and use it on any GSM network.

Unlike the iphone unless you are with AT&T you have to pay an arm and a leg and bend over with your pants down to get one. i know you can get an used on from craigslist.

i am not hating AT&T or anything just saying that why get a locked phone when GSM aren't meant to be lock.

Jan 12, 2010, 5:11 PM


Maybe I am a bit if a cynic but if a customer is OK purchasing a device after knowing there are 2 ETF fees involved then why is the government getting in the way of that?

I can see it now, some guy to ignorant to read the Terms of Service buys the Nexus One and then tries to sell it to a buddy for $100 more than he paid for it. Google then sends him a letter asking for the $350 he owes them and now the guy is upset he didn't read the T's & C's.
Everone should enjoy their contract priced phones while it lasts. At this rate, Phones will sell at "FULL RETAIL" and then , the customer will receive "DISCOUNTS" on their bill based on plans chosen and accounts being current.
Same as. Vzw. Etf

Jan 12, 2010, 5:31 PM

Nice try Google!

$550 for something that doesn't even work!
Hopefully Verizon works out a better pricing plan because their ETF looks better already.
What do you mean it doesn't work? What are you talking about? That fee is only assessed if someone cancels the account, not if the device is defective.
Really? Verizon will likely have its $350 ETF and Google will probably still have ITS $350 fee as well! I have no problem with whomever is subsidizing the device to charge a fee, but I am unsure why the carrier charges an ETF if Google is the one su...
I !!KNOW!! $550 is more than retail! ! !
$550 for something that doesn't even work!
Hopefully Verizon works out a better pricing plan because their ETF looks better already.

too bad its only for T-mobile and Sprint so far. Nobody else.
$550 for something that doesn't even work!
Hopefully Verizon works out a better pricing plan because their ETF looks better already.

...not to mention their network.

Jan 12, 2010, 9:55 PM

An easy explanation

You do not get charged an ETF of 200 by T-Mobile unless you have passed the 15 day grace period set by Google. Google is the one that is charging the 350 ERF. If you read the contract it does state that they will charge you that if you cancel your contract with T-Mobile. They are trying to recoup the difference between the phone and discount. Since T-Mobile is not selling the phones, they don't have any control over the fees by Google. I work for T-Mobile, and I can tell you that Google did not think this through very well. You are only able to purchase one rate plan, cannot be a current T-mobile customer, and cannot qualify for a Flexpay account. The amount of customers that are actually going to be getting the discount is minimal. I b...

Jan 12, 2010, 7:50 PM

everyone cries but......

if we really wanted to have cheap phones we should blame the carriers and ourselves. we wanted free phones well we got them. now instead of phone developers making better products at a cheaper price we expect the carriers to front the cost which now we see the end results. thats why we are paying $100+ for unlimited calling instead of $50 and getting 4g service with lanline quality voice. so dont cry now that verizon, sprint, tmo, att are all saying F the customer and charging us an arm and a leg. we want cell phones to do everything then we are going to pay for that......
Nothing that makes sense.

Jan 12, 2010, 5:15 PM

It's so simple!!!

If you don't want a contract pay full price.

If you want it cheap take the contract and honor your word.

Its really not that hard, and for all the people well 500 is to expensive.... how bout this get a different phone then... I hate when people complain like that... how bout don't buy champagne on a beer budget.
Exactly. If Google gets pushback they should say, "Screw it! We are only selling it at full retail!". That is how it should be anyway. I have had it with the deadbeat mentality that many have. There is no right to a cheap smartphone.

Jan 12, 2010, 6:29 PM

htc rapage one

thats it.. Surprised

Jan 12, 2010, 5:00 PM

Put it back in the oven...

So let me get this straight, if you cancel your contract early you're paying a $200.00 premium OVER the unlocked handset? I would've thought Google and T-Mobile would have worked this out a little more consistently, as this is nothing short of ridiculous, on top of the half-arsed support network.

On top of that, wasn't Google's whole MO to help subsidize the handset with advertising revenue?
Its the same thing WireFly does, What is wrong with it?
There were only rumors about subsidizing handset with advertising.. the only way you could see that on a phone is if adds popped up on your home screen.. which is NOT what a stock phone will do
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