I feel certain economists, including those working for the FCC, will weigh in on Verizon's claims, which make some sense, at least at the surface. In the spirit of "innocent until proven guilty" I am quoting Verizon's entire response to the EFT question.

The quote starts with the FCC's question, in italics. Verizon's answer then appears, followed by my comments, as marked at the end.

"It appears that if a customer cancels a two-year contract after 23 months, the customer would still owe an ETF of $120. Is this correct? If the ETF is meant to recoup the wholesale cost of the phone over the life of the contract, why does a $120 ETF apply?

"Response: The new ETF structure for Advanced Devices begins at $350 and declines by $10 per month for a two-year contract. Thus, a customer terminating in the last month of a two year contract term could be assessed an ETF of $120. This ETF structure is fair and reasonable for several reasons.