Google Drops Nexus One Recovery FeeGoogle Drops Nexus One Recovery Fee

(click image for larger view)
Google Nexus One Smartphone

Prodded by the Federal Communications Commission, Google has lowered the fee it charges users who return its Nexus One before their contracts expire. The “equipment recovery fee” is now $150 instead of the initial fee of $350.

Users, however, will still face a separate $200 fee charged by T-Mobile USA, which is offering the handset in the U.S. Users of the Nexus One have flooded user forums with complaints, many of which seem centered on the actual network service itself. The most frequent gripe has been that the service drops from 3G to the slower 2G EDGE service.

Google has proactively attempted to fix any problems with the Nexus One, which the search engine colossus is also offering for sale directly to consumers. The company has addressed the support issues, and is reportedly looking to hire a "phone program support manager."

“Google’s overall financial philosophy with regard to operator service plans remains unchanged,” Google said in a statement. “We make no profit from commissions from operators or from equipment recovery fees, and our recovery fees are based on operator charges to Google for early termination of service.”

Consumers who cancel their service within 14 days are not charged any penalty by Google; the lowered $150 fee is charged to customers who cancel after 14 days and within 120 days of starting service. The Nexus One was first offered for sale in early January.

Google said it has been working with T-Mobile to improve the customer experience of the Nexus One. T-Mobile said the lowered equipment recovery fee is not connected to any FCC action, according to media reports. The FCC has been questioning carriers and handset makers about excessive early termination fees, which have been a longtime sore point with consumers and the regulatory commission.

At the same time, carriers are facing an overloading of their networks as smartphone usage continues to surge, and new devices, such as Apple's iPad, come on the market. T-Mobile’s Advanced Wireless Services (AWS) spectrum hasn’t provided broad nationwide coverage and it’s still not certain that it is up to handling the increased data demands of Nexus One users.

AT&T, under pressure to upgrade its network due primarily to the boom in Apple iPhone usage, has committed new capital to upgrading its network. Sprint Nextel is betting the rollout of its WiMax wide area network will solve its network problems.

Only Verizon Wireless seems able to currently handle data networks, but it, too, will likely come under pressure as smartphones fill the ether with more and more data.