ATT To Raise Upgrade Fees

Wireless cellular company ATT announced that they will be increasing their fee to upgrade from an old phone to a newer version, from $18 to $36 (see this article). This fee is placed on top of the cost of the original phone. The statement from the company said that the increase in price was due to "today's cellphones [being] more complex" and costing more to produce.

When comparing this policy to other wireless providers, Sprint has the same fee (increased this year as well) but Verizon Wireless does not have any upgrade fee. In the world of cellular phones, Verizon and ATT are the two most recognizable brand names. It seems like everyone has either Verizon or ATT.

This is why the increased fee is surprising to me. If Verizon can make do without charging an upgrade fee, what does ATT do differently? Sprint is a smaller operation than Verizon and ATT, so they need to make money any way possible. But when people are comparing the two main providers and see a $36 upgrade fee for ATT vs. none for Verizon, that should push a lot of potential customers away from ATT.

There is also the issue of the supposed "increased costs" that ATT would incur by upgrading a client to a more complex phone. It does not seem like the company would undergo many costs by simply upgrading a phone. They don't have to spend much on labor or materials to make a simple transaction. The article attached makes several great points as well, including that "the new upgrade fee applies not only to smartphones, but also to traditional cellphones, which aren’t “more sophisticated than ever before.” Without a clear reasoning for these increased costs, it will just appear to be a cheap way to raise profits for ATT. Customers will not appreciate it and could potentially drop ATT for a company like Verizon.

The main argument that I'm trying to make is that ATT will most likely need to do damage control after increasing these fees. Existing customers will not be happy and potential customers could be scared away. Doubling fees with suspicious reasoning will not go over well. Verizon does a much better job with these costs, as they describe it as an "activation fee" when the customer first signs up with the company and it's only a one-time fee. That way, the customer knows that they will be safe with Verizon and can upgrade within the company without any extra fees once that activation fee is paid.