Instead of wishing Verizon Wireless a happy holiday, FCC Commissioner Mignon Clyburn has sent a not-so-happy message to the wireless carrier. In an open letter, the newly appointed commissioner said Verizon has some explaining to do.

Clyburn wants Verizon to provide better justification after the company last week announced a higher early termination fee (ETF) for contracts associated with the purchase of smartphones, PDAs and netbooks offered at a reduced price.

The commissioner called Verizon's reason for increasing the ETF from $175 to $350 "troubling" and "unsatisfying" and expressed hope the company will reconsider the fee hike that may affect tens of thousands of Verizon users.

What also troubles Clyburn, her letter says, is the $1.99 fee that users without a data plan are being charged to go the mobile home page.

Black and White

Verizon defended its changes and added clarification in a 77-page response to the Federal Communications Commission. The wireless carrier cited advertisements, contracts and other materials to show that consumers know about the ETFs before making a purchase.

"Our ETF for all other devices remains at $175, which was set long before the advent of these expensive, sophisticated, mini-computers that also make calls and can be carried in pockets and purses," said Thomas Pica, a Verizon spokesperson.

Verizon argues that ETFs allow customers to have it either way. They can have no ETF on a month-to-month service and pay full retail for a mobile device, or they can get a discounted device with an ETF.

An example is a recent Verizon offer. Consumers pay $179 for a BlackBerry Storm 2 with a two-year contract. If the user breaks the contract very early and before the first $10 incremental decline, he or she will have paid $529, including the ETF. The full retail price of the phone is $539.

Verizon said most customers opt for the contract because they see the value of buying a normally higher-priced device at a discount. In exchange for the discount, customers agree to an ETF.

Footing the Bill

The company also defended the data fees that the FCC described as phantom fees, saying the company only charges users when they move from the home page to another web page.

Verizon said the ETF increase covers not only the cost of the device, but also the cost of advertising, the commission for sales representatives, and store costs.

The FCC isn't happy with Verizon's explanation and said consumers shouldn't have to "foot the bill" for costs other than subsidies paid for a device. Clyburn said she plans to work with her colleagues to look further into wireless carrier ETFs in the new year.