Warning, Nexus One users! Dangerous fees may lie ahead

Tempted by Google's new Nexus One phone but having second thoughts? If you're going to break your two-year contract on the subsidized model, make sure you do it in one of two ways: within 14 days of acquiring the phone or after four months of phone usage. Canceling at any point between 14 days and 120 days subjects you to a set of terrific fees, payable both to Google and T-Mobile. And these go far beyond just paying back the device subsidy.

In this terms of sale document, Google makes clear that "you agree to pay Google an equipment subsidy recovery fee (the 'Equipment Recovery Fee') equal to the difference between the full price of the Nexus handheld device without service plan and the price you paid for the Nexus handheld device if you cancel your wireless plan prior to 120 days of continuous wireless service." This Equipment Recovery Fee will run US users $350 under the currently available T-Mobile subsidy plan, and Google will charge it to the credit card used during the device purchase. Well, fair enough; if a phone is subsidized by a two-year service contract, one could argue that it's only right to pay back the remaining subsidy when you cancel. But Google goes on to 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." It also stresses that this fee is not a "penalty." A look at T-Mobile's terms and conditions makes clear that you'll be paying a hefty second fee if you cancel within those first four months.