Wireless carriers are seeing an increase in customers lately, but also a lot of customer turnover. Competition is fierce, and with the exclusive handset deals the big four carriers have, if you want a certain smartphone, you have to switch to the carrier that offers it. So you’d think that wireless companies would be doing everything in their power to make things easier on their customers, up to and including offering incentives for long-term contract holders who decide to upgrade to smartphones, and renew their contracts at higher monthly costs. It’s counterintuitive to think wireless carriers would charge loyal customers any kind of fee for that kind of upgrade, but that’s exactly what they’re doing.
Upgrading to a smartphone requires an updated contract to accommodate different usage patterns, and the addition of data plans. Because of the addition of data, smartphones come with higher monthly costs than plain cellphones. So if a customer upgrades, signs another two-year contract, agrees to pay a higher monthly cost, plus the cost of the smartphone, the wireless provider is already making a decent profit. The upgrade fee serves no purpose other than to increase the company’s bottom line. The secondary effect is angering a long-time customer, and possibly losing him to a competitor.
Both T-Mobile and AT&T charge an upgrade fee. So does Sprint, but only if you buy the smartphone in one of their retail stores. If you make your purchase online, the fee is waived. The same goes for Verizon, but only if you upgrade early, meaning at the one-year point of your contract rather than waiting until the contract is renewable at 20 months. How does that even make sense? Are upgrading customers paying for the cost of operating a retail store? That’s a cost of doing business that should already be taken into account when setting prices for merchandise and services. U.S. Cellular does not charge upgrade fees.
Apparently, T-Mobile, AT&T, and Sprint haven’t learned any lessons from the class-action suits they’ve all been subjected to over the last couple of years, most of them having to do with charging unfair fees. It’s surely only a matter of time before someone files a new one over upgrade fees.
Share this Post
Subscribe and Follow
Subscribe to the Going Cellular feed via RSS and follow Going Cellular on Twitter!
{ 4 comments… read them below or add one }
Just a thought, what is the upgrade price of a phone for Verizon and US Cellular as compared to a new price. For disclosure, I work as an external rep for AT&T, and in Best Buy the price of our upgrades are often the same as our new contract prices, where Verizon’s prices are often $50 more expensive, making the $18 upgrade fee insignificant. Just saying that there may be more to the story than you are disclosing. And depending on where you work, if you have the proper Foundation Account Number associated with account, your upgrade fees may be waived and you will receive an equipment credit toward the purchase of a new handset.
Oh yeah, and don’t all three carriers have less expensive plans then Verizon? Take for example Family Messaging, $30 for AT&T and $35 for Verizon, heck over the life of the contract that is almost 7 upgrade fees. And Sprint who, in my opinion, does very few things well, has rate plans that are very good and easy to understand and can save you much more over the life of the contract. And doesn’t T-Mobile give you a bill credit on your first bill that is MORE than the activation fee? Just sayin.
And as far as class action lawsuits go, Verizon was the chief defendant in the class action lawsuit over ETFs. That one went all the way to the Supreme Court. Before that case got that far AT&T changed their policy to prorate those fees. Only after being prompted to do so by the Supreme Court did Verizon follow suit. Must be some carriers are quicker learners than others.
Unfortunately, US Cellular is a regional carrier and they are not available in my area, so I cannot speak to their policies or pricing.
I see that you’re trying to make a point, but I must disagree with your approach. The answer to your first question, “Just a thought, what is the upgrade price of a phone for Verizon and US Cellular as compared to a new price.” would depend on which phone was being purchased.
I appreciate your disclosure that you’re an AT&T rep, but it doesn’t bolster your case when you say Verizon’s prices are more expensive than AT&T’s. As an AT&T rep, surely you’re not going to state that any provider has better prices than AT&T, are you? To also provide full disclosure, I don’t work for any wireless provider, so I have no stake in touting one provider over another, or “disclosing” price comparisons.
If you will check this site more thoroughly, you’ll see that AT&T, Verizon, and other major providers have their own pages which list the plans and features they provide, as well as links to each provider’s site to get even more information. It would not be feasible to list a price comparison in each post regarding plan costs and fees. That’s why those pages and links are there, to give consumers the resources to educate themselves and easily find all available information.
In addition, while some of our articles do show the negative side of providers, others cover their positive aspects. There is no provider bias here.
Yes, it’s a well known fact that some providers’ plans are more expensive than others, and that some offer different incentives than others. That’s the nature of competitive business. It’s also why consumers have to make the choices that best suit their needs in regards not just to price, but what phones, plans, and features are offered. Our goal is to provide as much information about each carrier as we can and let consumers make their own decisions.
Finally, you are correct that AT&T changed their ETF policy, but that is not the focus of the class action lawsuit that is currently proceeding against them. Again, I encourage you to read our coverage more thoroughly before assuming bias.
Thank you for taking the time to comment.
Verizen does charge an upgrade fee as well.
Really, justme? Is that new. I upgraded my Verizon phone not even a year ago, and wasn’t charged a fee.