Google has proven that a company can succeed by innovating and being nice to customers... why don't more be like them!? Well hopefully Google drives them out of business.
They don't do this because customers have proven that they will flock to subsidized phones with unfavorable contracts. Verizon needs to protect itself from people who might sign up for a nice phone, then try to drop the contract, netting them a new phone for up to 100% off.
Verizon is not doubling the fee to protect itself from broken contracts. If that were the case, they would simply demand that the subsidized portion gets paid back. They are trying to lock customers in and penalize people for switching.
This will be a short-term win. In the long term, it may reduce new signups. If you have a huge subscriber base and limited competition you can afford to milk them for all they are worth.
It's still a crappy thing to do.
The $1.99 charge is flat out unethical. I used my cable box to rent a movie once, but it didn't download properly and getting my $2.99 or whatever credited back into my account was such a pain that I never did it again. It made me question my whole relationship with them. If my carrier charges me $1.99 for a mistaken button press that I cannot disable, I would do everything in my power to drop them.
It seems like whenever consumers have an ostensible choice in something, but do not pay the full price for the thing they're buying, they end up not acting in their best interest because the costs are distorted. Whether it's health insurance, airplane tickets, or cell phones.
In this case, for instance, Apple can say an iPhone costs $600, because, to a consumer, it costs $200. The amount that Apple gets for the device could just have easily been $500 or $800 because, well, that's not what you're paying when you buy one.
