It would seem that I was way off mark when I said that Google’s Early Termination Fee (ETF) for the new Nexus One phone was effectively $350, it’s actually $550 which is more than the price of buying the unsubsidized full price of the phone!

How can this be?  It turns out that the Equipment Recovery Fee (ERF) that Google imposes for early termination of subsidized Google Nexus One phones is in addition to the $200 ETF imposed by T-Mobile and it’s spelled out clearly in bold type face on Google’s Terms of Sale webpage.

Please note that the Equipment Recovery Fee is imposed by Google and not your chosen carrier and is in addition to any early termination fees that may be charged by your chosen carrier in connection with termination of your wireless plan prior to fulfillment of your chosen carrier’s service agreement term.

A $350 ETF for subsidized Nexus One phones would be justifiable given that the subsidized price is $350 less than the unsubsidized price, but it’s not clear why early termination customers who have already paid $180 up front should owe an additional $550.   It would mean that someone who might be fed up with all the technical problems they’ve been having with the Nexus One would end up paying a total of $730 when the full unsubsidized cost of the phone is $530.

It would also seem that I was wrong again when I said that Google’s new business model for cell phones wasn’t all that different from existing business models.  It turns out that Google has invented some innovative new ways of extracting revenue from early cancelers that no other Telco has had the gall to attempt.  Now if they can justify the outrageous $550 ETF+ERF fee and figure out how to get beyond the initial debacle, they’ll do just fine.