Verizon to implement upgrade fee

Posted by Mark Raby

Gone are the days of hassle-free smartphone upgrades.

Verizon has announced that it will begin charging users $30 when they buy a new phone. And that's only after they've had their current phone for an extended period of time and are in the upgrade eligible window.

When you go into a Verizon (or any other carrier's) store, and you pay $200 for a smartphone, the carrier actually loses money on that phone, sometimes to the tune of hundreds of dollars per phone.

The good news, for the carrier, of course is that the margins on mobile service are much higher. Like, ridiculously higher. So, by making you sign a two-year service agreement, the carrier is guaranteed to recoup the money that it lost on the actual phone during the duration of your service.

That's why carriers are justified in charging outrageous fees if you want to end your contract early, and also why you aren't allowed to upgrade your phone usually until at least your current service agreement is about to expire.

Okay, so with all that said, the problem for carriers is that right now, smartphone sales are exploding. It takes time to make up that lost money, and keeping up with the growth in sales right now is tough.

That's why upgrade fees have been introduced. Of course, increased costs or pressure on companies never means they have to make sacrifices. It means you do, because they pass that onto the consumer.

Even with Verizon's new fee, it still isn't the most consumer-unfriendly carrier when it comes to upgrading. AT&T was already charging an $18 fee to upgrade when no one else was, and recently it shot that up to $36.