Customers are annoyed, but it was almost inevitable. Verizon (NYSE:VZ) has joined AT&T (NYSE:T), T-Mobile and Sprint (NYSE:S) in imposing a fee for customers upgrading between phones.
The new $30 fee starts on April 22. Current customers who buy new phones at discounted prices with two-year contracts will have to pay, CNN Money reported. People purchasing phones at full price will not.
Verizon claims the new fee will help it continue to deliver new technology and fast networks.
While $30 sounds like a big charge to pay for getting a new phone, other networks are getting more. Sprint and AT&T charge their customers $36 for the privilege. T-Mobile, on the other hand, levies a mere $18 dollars for equipment upgrades.
Actually, Verizon was the last of the major national carriers to institute an upgrade fee. CNN Money notes that wireless carrier profit margins have been slipping recently due to discounts given to customers for new phones. Apple’s (NASDAQ:AAPL) iPhone stands out among discounted phones because that discount — which the carriers pay to Apple — is pretty big.
The discounts used to be paid for with wireless subscription revenue, but CNN Money notes that cellular minutes have been declining over the last two years. Carriers are receiving an average of $10 less per smartphone user even as those smartphones are sucking up more and more data network bandwidth. Rising data traffic is forcing carriers to invest billions of dollars in network improvements and technology rollouts.
Such profit margin pressures have prompted a series of fee hikes, CNN Money. In January, AT&T boosted new contract prices by $5, while Sprint raised smartphone charges by $10 a month. Getting out of two-year contracts before the term expires is more expensive, too, as Verizon, Sprint and AT&T have doubled early-termination charges.
Still, not everyone is a critic. PC Magazine called the fee “a major statement of confidence” on Verizon’s part, noting that the company has never billed itself as a low-price carrier and has been ranked as having the best network in PC Magazine’s Reader’s Choice poll.
