"First, taking customers who terminate their contracts before the end of the contract term as a whole, still incurs a financial loss from early terminations, even with the $350 ETF. On average, customers who terminated early did so with more than twelve months still left on their contracts. Verizon Wireless estimates that, at the twelve month point in the contract term, its typical loss from the early termination is more than double the applicable remaining ETF amount for an Advanced Device ($230). Were Verizon Wireless to prorate the ETF in a manner that would reduce its amount to zero in the last month of the contract, the net losses to the company would be even greater.

"Second, prorating the ETF to zero in the last month would mean that, to recoup the same amount of the losses caused by early terminations as a whole, Verizon Wireless would have to set the starting amount for the ETF higher than $350. Customers as a whole would be worse off if Verizon Wireless were to take this approach because early terminations occur disproportionately in the early part of the contract term and relatively few customers terminate near the end of the contract term.

"Third, customers nearing the end of their contract term have choices if they want to avoid the remaining ETF amount. For example, customers could simply wait for their contract to expire because it would generally be more economic for them to do so. Moreover, customers who terminate walk away with a device that retains value.

"Contrary to the implication of the question, the ETF is not limited to the recovery of the wholesale cost of the device over the life of the contract. As explained in response to Question 4, the ETF partially compensates Verizon Wireless for all the costs and risks of providing service, which include advertising, commission, store costs, and network costs."

My Take: If the ETF were used solely to offset the cost of subsidized hardware, even with the$120 due in month 23 of a 24 month agreement, I might be able to accept it as somehow reasonable. But, since Verizon rolls other costs into the ETF, this seems like something the FCC might want to act upon.