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Google Says Nexus One $350 'ERF' Is Necessary

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

cwcanty

Jan 13, 2010, 12:10 AM
Okay,

Everyone wants to cry foul about this policy, but its a very common practice on sites like amazon.com. 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. ...
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bluecoyote

Jan 13, 2010, 4:30 AM
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.
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Otowncell

Jan 13, 2010, 10:01 AM
My question is why is google losing money? Tmobile already buys the phone directly from google so when someone cancels their contract google doesnt loose money they already recieved that from Tmobile. It's not like google is providing the service.
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cwcanty

Jan 13, 2010, 10:11 AM
Google does not get paid their money right away. My guess is that they get the full amount after 121 days. Hence the ETF up to 120 days.
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Kagehiru

Jan 13, 2010, 11:40 AM
Google sells the phone to Tmobile at a loss. essentially subsidizing T's purchase. In exchange, Tmobile promises to pay Google a sum of money after a set period of time, usually 3-6 months. By doing so, Google gets to sell more phones at lower price points and Tmobile has time to generate revenue from the customer they sold the phone to. If a customer breaks their contract before they've achieve ROI, both companies lose.
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cwcanty

Jan 13, 2010, 10:14 AM
The ETF for the carrier is really for both the phone and a penalty for them losing the money you would have spent with them throughout the contract.

With 3rd party deals. Both the carrier and the supplier need to be compensated. In this case. Google is the 3rd party dealer.

Both google and Tmob need to be compensated. Its a fair deal.
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bluecoyote

Jan 13, 2010, 11:43 AM
They both need to be compensated, but it seems that rather than T-Mobile giving your ETF money to Google (as is what happens if you purchase say, a Samsung or LG and cancel your contract) to cover the rest of the cost of the handset, they're pocketing it and making you pay it again to Google to reimburse them. All of it.
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cwcanty

Jan 13, 2010, 1:58 PM
Tmob is losing money if they give their money to google. One, it wont cover the initial subsidy google gave tmob for the N1. Two, Tmob has just lost you as a customer for 2 years. They lose all that revenue YOU said you were willing to give them by signing a deal, Hence, an ETF.

Again, both companies have a legit reason for each having their own ETF. Its fair and its outlined appropriately before you get the phone.

Not sure what youre missing here...
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bluecoyote

Jan 13, 2010, 3:25 PM
What money is T-Mobile losing? They're not GETTING money, that's different from LOSING money. Google is LOSING money if they don't collect the subscriber revenues because Google subsidized the handset price.

I'm not sure what part of that you don't understand, the only money they're losing is theoretical. They're not entitled to theoretical dollars.
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cwcanty

Jan 13, 2010, 3:32 PM
Yes they are if you sign a deal saying you WILL pay them.

Thats like saying, I can leave a leasing agreement for an apartment, and the leasing company will lose nothing cause I haven't paid them. Ummmm, no. The leasing company loses all the revenue you agreed to pay them over the term of the leave.

People budget and make plans based on dollars they are having coming in. And if you leave, they no longer get those dollars, so you need to pay a penalty.

By your logic, no one would EVER have to honor a contract.
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iamthephonemaster

Jan 13, 2010, 9:52 PM
Whats really funny to me is the amount of people posting on this that obviously have never worked for a authorized dealer in the wireless industry.The ETF is different than the ERF.T-mobile charges you an ETF if you break your two year agreement with them to continue wireless service. Now this is the part people cant seem to get or just plain dont understand. Google is acting as an authorized dealer for T-mobile in this scenario.They are selling you T-mobiles service and subsidizing the equipment themselves because they are getting a comission from T-mobile for signing you up. Same as those awesome guys in the mall kiosks that say In touch wireless ( shameless plug).Now if you cancel your service with T-mobile after the 14 day return period ...
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rarodrig26

Jan 13, 2010, 11:26 AM
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 who bought it unlocked. I really don't get why ppl bitch so much.
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cwcanty

Jan 13, 2010, 1:55 PM
Exactly!
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Kilya

Jan 13, 2010, 12:04 PM
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 minimize losses they should just sell the phone for an expensive cost. iPhone retail is something like $700 buy out but you don't see APPLE slappinging their own cancelation fee on them and thats APPLE they invented shafting customers and people taking it. Companies like Tmob and Verizon need to sell the phones for the cost they are instead of making them cheap as dirt and then having a huge cancellation fee. Now I know this cancellation fee is through Google, but google needs to realize that cost l...
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rarodrig26

Jan 13, 2010, 12:07 PM
Yeah but apple invented other ways to shaft their customers...like telling At&t they couldn't put insurance on the iphone, then you have to buy two phones if you break one instead of just doing an insurance claim. Just the first example off the top of my head.
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iamthephonemaster

Jan 13, 2010, 10:40 PM
Thats because, apple isnt acting as an authorized dealer for ATT. they are simply selling you hardware. same as any mac book or ipod. Thats the difference. why cant people get that part of it.Google is not acting as the manufacturer because they arent HTC is. Google is the authorized dealer for T-mobile.
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ecb

Jan 13, 2010, 1:43 PM
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 cancel before Google gets their money from TMobile, they're out that money. They have every right to enforce and fee if you buy the phone at the subsidized price.

I do not agree with you at all regarding the TMobile ETF. If Google is selling you the phone and subsidizing it then all TMobile is doing is providing service.

I'd love to know how you think TMobile is losing thousands of dollars if someone breaks a contract. TMobile is NOT immediately recognizing 2 years of revenue from servi...
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cwcanty

Jan 13, 2010, 2:21 PM
Tmob is out the money CAUSE YOU BREACHED A SIGNED CONTRACT. Your whole argument is pointless right there, because you are basically saying that its "ok" to break a contract because its only been a month or two.

HELLO!!! You don't sign 3 month cell contracts. You sign 2-yr contracts. Stating that you will pay for 2 years of service at a specified rate or pay a fee if you want to leave early.

Its a contract, so Yes, Tmob will lose money, because in theory you should have given then 24 months of revenue. Instead they got 2 months. They just lost 22 months of revenue cause you breached a deal. I think you should have to pay for that.
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dthree

Jan 13, 2010, 3:13 PM
How is this not kid simple? Buy the subsidized phone for $179 and cancel the contract before the 4th month you pay the $350. So what is your total cost for the phone? $529. Wow! What a coincidence, that is the exact same amount to purchase the unlocked version. I don't see how this is unfair to consumers. It's just there to prevent people from scamming the deal and selling the phone on ebay at a profit.
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dthree

Jan 13, 2010, 3:17 PM
Oops, forgot the $200 tmobile ETF, that does make it seem like double-dipping.
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iamthephonemaster

Jan 13, 2010, 10:48 PM
But the point is its not Google charging you the ETF. they are charging you the ERF. They are totally different and for different reasons.
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iamthephonemaster

Jan 13, 2010, 10:44 PM
Wow this is getting ridiculous. Google is the authorized dealer agent. They get a commision from T-mobile for signing you up for service. If you cancel before 120 days they lose that. Now i already said i dont agree with T-mobile getting to charge the dealer back AND getting a ETF from the customer. although, you did break a contract and just like if you break your lease on your car or apartment the person you had that agreement with has the ability to charge you for the lost monies they would have got if you had completed your part of the agreement.
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