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Verizon has been the last holdout on charging upgrade fees for some time now, but this morning it caved and announced existing customers would have to pay a $30 fee when moving to a new phone subsidized by a two-year contract.
It’s not a huge fee, but it could save Verizon around $1 billion annually before interest, taxes, and depreciation, reports BTIG Research. The firm reached the figure by estimating that Verizon would sell 33 million phones to existing customers over the next year. Some Verizon customers won’t upgrade to subsidized phones, so they won’t have to pay the $30 fee, but they will be paying a significantly higher unsubsidized price for their next device.
“We do not expect this to be the last move by Verizon (which still charges a lower fee than AT&T and Sprint) or other operators,” writes BTIG’s Walter Piecyk. “Could it be long before smartphones get their own additional upgrade “surcharge”?”
In comparison, AT&T and Sprint charge upgrade fees of $36, while T-Mobile (no surprise) charges the lowest fee at $18. Just like the unlimited data plans, which Verizon killed off last June, the company’s free upgrades were too good to last forever. The fee is small enough that customers won’t throw a fit, but it could still help the carrier recoup some of the costs it swallows when offering subsidized smartphones.