Cancellation Of Google Nexus One Purchase Costs $350

Google (GOOG) has not been able to make much money from any business other than its huge search advertising operations. The company hopes that sales of its handset called the Nexus One will produce a new source of revenue.

T-Mobile sells the Nexus One for $179 for subscribers who take a two-year contract for wireless service. Customers who don’t want the service pay $529 for the handset. It turns out that if T-Mobile customers cancel their service after a two-week trial, Google charges a fee of $350 to take back the handset. That is on top of the termination fees that T-Mobile charges.

According to BusinessWeek, the FCC wants Google to explain the fee. The magazine adds “Consumers have been surprised by this policy and by its financial impact,” two officials of the Federal Communications Commission said in a letter to Google.

Google has already suffered from a lack of strong customer service support for the Nexus One. It has now compounded the PR problems associated with the handset’s launch by levying a large fee to cancelling customers. These fees are not unusual in the wireless market, but $350 is a very high price to pay to Google for it to take the phone back.

Google has made an excellent start in the global handset business by offering its Android OS to cell phone makers for free.  It might have followed that by successfully launching its own phone. But, consumers have long memories and bad press travels fast. Google may make it through a FCC inquiry about its $350 termination charge to customers who buy the Nexus One, but it is quickly turning consumer opinion against the virtues of buying a phone with the Google brand on it. Reputation is a fragile thing.

Douglas A. McIntyre