Verizon Drops Draconian Xoom 3G Fees But Beware Other Gotchas

Verizon began selling Motorola's Android Xoom tablet on Thursday amidst rampant rumors over 4G activation fees for the pricey off-contract device. Verizon had planned to charge a one-time 4G activation fee and require one-month's service fee, but the company has confirmed that it won't charge those draconian fees. There are, however, still some gotchas if buying an off-contract Xoom from Verizon.

To recap: The Xoom is the first Android 3.0 tablet and it is priced at $800 off-contract from Verizon and Best Buy. It costs $600 if purchased with a new two-year contract, and requires a data plan and a $35 activation fee. Customers who paid the extra money to buy off contract, planning on using the device only on WiFi, were at first told that they had to sign up for one-month's data plan anyway, for $20, and pay the $35 activation, but they were free to cancel their data plan after the first month. Verizon has changed its mind and will not force off-contract users to pay an extra $255 for the privilege of buying a tablet from Verizon. $200 will be enough, thank you.

But before you buy, be warned that if you don't like the device and want to return it, there will be fees involved with that, too. You have 14 days to return it and if you do so within that time period, Verizon will graciously only charge you a restocking fee of $70. This policy applies to returning netbooks, too, by the way. (Returning a phone costs a mere $35).

But wait, more fees may apply. If you bought the device under contract, you really only have three days to change your mind because you must deactivate within three days of the device being activated. Got that? And if you return your device after two weeks, Verizon says you won't get your money back AND, they won't return the device to you, either. Nana-nana-boo-boo.

Here are the fees directly from Verizon's return policy page.

"You may terminate service for any reason within 14 days of activation. If you purchased a wireless device at a promotional price at the time of activation, you must return it within the device return period to avoid being assessed an Early Termination Fee of $175, or $350 if you purchased an Advanced Device. You will remain responsible for your Activation Fee unless you terminate service within three days of activation. You will also be responsible for all applicable usage fees, prorated access charges, taxes, surcharges or other charges that accrued to your account through the termination date. If you paid a security deposit, it may take between 30 and 60 days to process the return of your security deposit. The charges for any service used on the account before the service termination date may be applied against your security deposit. If you cancel your service after the 14-day period, but prior to the expiration of your minimum term, you will be responsible for all of the above-mentioned charges, including an Early Termination Fee.

"If you return your merchandise, even by mistake, after the return period, you will not receive a refund and the merchandise you returned will not be returned to you."

Rumor alert: Others say that if you buy a device off-contract, and you do opt later to use Verizon's mobile data, not only will you be charged for using it, you'll be charged $35 every time you activate the device to use Verizon's network. After scouring the Verizon site, we couldn't find the written policy that confirmed this, or adequately explained the extra fees entailed in a no-contract monthly plan. If you activate for one month, and deactivate for another, then want to activate again, the rumor probably has some truth to it. Before you buy an off-contract Xoom from Verizon or Best Buy, ask about it.

All this, and the device isn't even capable of supporting 4G yet, which won't happen until Q2, 2011. That will be a problem for early buyers, too, as it will require returning the device to the factory where you can expect it to be returned to its factory pre-sets, data wiped clean.

Clearly the Xoom's pricing is all about Verizon not hurting its new-found relationship with Apple. Many people say they will wait for the WiFi only version. It's existence has been confirmed, but no details beyond that are yet available.

In the meantime, prices on Samsung Galaxy Tabs have plummeted to $250 on T-Mobile (with two-year contract) and $300 on Verizon and Sprint (with contract). Apple-loving AT&T will only sell the Tab to you for $550, no contract required.

There is plenty of pent up demand for high-end, affordable Android tablets. The carrier that comes along and fulfills that will be surprised by a tidal wave of success. In the meantime, people are expecting the iPad 2 perhaps next month.