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Verizon Wireless to charge customers $30 for upgrading to a new phone

post #1 of 65
Thread Starter 
Verizon Wireless has decided to tack on a $30 surcharge when users opt to upgrade their mobile device. AT&T has indicated it will likely follow suit.

Pinched by the heavy subsidies it pays Apple to attract iPhone buyers, Verizon has announced it will charge upgrading customers an additional $30 fee when they qualify for a subsidized device and choose to switch phones.

In a report by Reuters, the carrier said it would be charging the fee to "provide customers with the level of service and support they have come to expect."

Verizon and other carriers have agreed to pay Apple industry leading subsidies of around $450 to attract new subscribers who want an iPhone, in order to lock them into a contract of two years or more.

However, when existing customers upgrade their phone, carriers don't earn as much additional new income; the customers merely continue to pay for the phone and data service they use.

Verizon's move may be intended to counter the shift of its existing smartphone customers, many of whom bought Android devices in 2010 before the company began selling iPhones. Customers who will be finishing their two year contract this year will qualify for a steeply subsidized new iPhone, but likely won't be paying anything additional for service because they were already signed up for expensive data contracts.

Verizon has been charging its customers more for Android phones, due to the limited clout Android manufacturers have in negotiating phone subsidies with the carrier.

Typical Android subsidies at Verizon range from $60 to $200 less than the $450 subsidy iPhone users get, making comparable devices more expensive up front and pushing low end Android phones into the the same price range as Apple's iPhone 4. Verizon is eating the difference, causing Android users to effectively subsidize the price of iPhones.



After an initial period of attracting new iPhone users and converting many feature phone customers to more expensive data contracts, Verizon is now finding itself with less low hanging fruit to take advantage of, as the market for smartphones begins to satiate demand, even as new alternative and regional US carriers gain access to the cash cow iPhone.

Chicken Little says the subsidy is falling

Last week, BITG Research analyst Walter Piecyk decided Apple's high iPhone subsidies wouldn't last, and issued a downgrade and a prediction of revenues $1 billion below consensus.

However, a year ago analysts were saying the same thing.

James Ratcliffe, an analyst at Barclays, estimated last January that Verizon would sell just 9 million iPhones in 2011, spending $350 to subsidize each sale, for a total of $3.2 billion.

Ratcliffe also expected AT&T to sell just six million iPhones in 2011, down from around 15 million in the previous year. He also figured that AT&T's subsidy will drop from $400 to $350 per device due to the end of its exclusive deal with Apple.

In reality, AT&T sold 9.4 million iPhones just in the fourth calendar quarter of 2011, and Verizon sold 4.3 million in the same quarter. Neither carrier has cut its iPhone subsidies, even as Sprint and a variety of new carriers have joined Apple in selling iPhones in the US.
post #2 of 65
Luckily I bought a "4G" 4S in October which can last me a good 2 years- no need to upgrade this year- totally happy with this generation.
I wouldn't be surprised if AT&T tries to terminate unlimited data plans on any next iPhone upgrades to LTE this year too.
post #3 of 65
This sucks. Looks like the iPhone 5 is going to cost me $30 more when I decide to ditch my 4-year old moto-dumbphone. On the other hand, it's still better than getting no subsidy at all.
post #4 of 65
Quote:
Originally Posted by jukes View Post

This sucks. Looks like the iPhone 5 is going to cost me $30 more when I decide to ditch my 4-year old moto-dumbphone.

It feels that more people will buy smartphones since there will be no free dumbphones. I probably will get a smartphone when my current 2-year term is up.
post #5 of 65
"In reality, AT&T sold 9.4 million iPhones just in the fourth calendar quarter of 2011, and Verizon sold 4.3 million in the same quarter. Neither carrier has cut its iPhone subsidies, even as Sprint and a variety of new carriers have joined Apple in selling iPhones in the US."

This is stated as a known fact, but I don't think we have any information regarding what price ATT and VZ pay for iPhones, right?
post #6 of 65
Okay so let me get this straight...sorry for being stupid...

So at the end of the my contract I would have to pay $30 to upgrade to a new iPhone on top of what it already costs? If true, it sounds like they're nickel and diming me.

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post #7 of 65
Quote:
Originally Posted by AppleInsider View Post

Verizon Wireless has decided to tack on a $30 surcharge when users opt to upgrade their mobile device. AT&T has indicated it will likely follow suit.

This doesn't invite antirust scrutiny?!

^%#$*&.
post #8 of 65
Quote:
Originally Posted by jukes View Post

iPhone 5

SIX.

Also, it is now CHEAPER to move to a different carrier every two years than to stay with the same one.

Pretty sure they'd waive this idiot tax when I bring up that point at upgrade time.

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post #9 of 65
They would care less.
post #10 of 65
Is anybody else starting to see analyst who predict the doom of Apple as the following?

post #11 of 65
ATT already charges some BS upgrade fee, i think it was $18 per phone when i upgraded to the latest 4S. The fee is for them to update their customer records. You know, the records which already have all my information. Nickel and dime @#$@#$@.

When i asked them to wave the fee they refused and when i asked what it was for they said it was also for them to pay employees at the store to help me decide what phone is best for me. I never even talked to them before upgrading nor would i want to.

What sucks is that I'm pretty sure the other carriers do the same BS.
post #12 of 65
Quote:
Originally Posted by Tallest Skil View Post

Also, it is now CHEAPER to move to a different carrier every two years than to stay with the same one.

Pretty sure they'd waive this idiot tax when I bring up that point at upgrade time.

Why isn't the DOJ investigating this insane business practice? Charing users a start up fee is bad enough (I still don't understand why a provider needs money to start my service) but charging users a fee when they stay with their carrier and upgrade is outrageous.
post #13 of 65
What the article doesn't seem to include is that AT&T, Sprint and T-Mobile have been charging this fee for quite awhile now. AT&T was charging $18 and it sounds like they are going to raise it to $30 to match Verizon. Sprint charges $36 and T-Mobile charges $18.

Apple Insider is making much to do about nothing. You're paying $100+ a month....you shouldn't worry about $30 every two years.
post #14 of 65
Well.. I really like my 4S but I'm looking forward to the iPhone 5. I feel better knowing I'm not the only one getting screwed!
post #15 of 65
Quote:
Originally Posted by macxpress View Post

Okay so let me get this straight...sorry for being stupid...

So at the end of the my contract I would have to pay $30 to upgrade to a new iPhone on top of what it already costs? If true, it sounds like they're nickel and diming me.

They all ready charge a service activation fee anytime you reup your contract.

Looks like I'll finish my AT&T contract, demand they unlock my phone and head to tmobile or such. They will be so happy to see me that they will probably pay me $30 to sign up

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post #16 of 65
ATT is now charging $36. I received the info this morning when I check my contract status by dialing *NEW#
post #17 of 65
Quote:
Originally Posted by bongo View Post

What the article doesn't seem to include is that AT&T, Sprint and T-Mobile have been charging this fee for quite awhile now. AT&T was charging $18 and it sounds like they are going to raise it to $30 to match Verizon. Sprint charges $36 and T-Mobile charges $18.

Apple Insider is making much to do about nothing. You're paying $100+ a month....you shouldn't worry about $30 every two years.

Sprint, ATT, Tmobile, charge around 30 for new line activation, but they don't charge for upgrades.
post #18 of 65
Quote:
Originally Posted by kozchris View Post


When i asked them to wave the fee they refused and when i asked what it was for they said it was also for them to pay employees at the store to help me decide what phone is best for me.

I would have been like 'you can and will waive that part since you legally can't charge me for a service you didn't provide as I bought my iPhone at the Apple Store.

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post #19 of 65
Quote:
Originally Posted by yensid98 View Post

Why isn't the DOJ investigating this insane business practice? Charing users a start up fee is bad enough (I still don't understand why a provider needs money to start my service) but charging users a fee when they stay with their carrier and upgrade is outrageous.

What about the not so little detail that about $15 of your bill is to payback your subsidy but when you are out of contract they don't remove that charge and same if you pay full rce

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post #20 of 65
Quote:
Originally Posted by macxpress View Post

So at the end of the my contract I would have to pay $30 to upgrade to a new iPhone on top of what it already costs? If true, it sounds like they're nickel and diming me.

Ya Think?!
post #21 of 65
Quote:
Originally Posted by bongo View Post

What the article doesn't seem to include is that AT&T, Sprint and T-Mobile have been charging this fee for quite awhile now. AT&T was charging $18 and it sounds like they are going to raise it to $30 to match Verizon. Sprint charges $36 and T-Mobile charges $18.

Apple Insider is making much to do about nothing. You're paying $100+ a month....you shouldn't worry about $30 every two years.

Every year. If they only charged it to people who were getting "early" upgrades like me (ATT gives me a new iPhone every 12 months) I would understand this fee. I don't see how they can get away with charging people who wait 2 years for a new phone.
post #22 of 65
Quote:
Originally Posted by some internet dude View Post

Sprint, ATT, Tmobile, charge around 30 for new line activation, but they don't charge for upgrades.

AT&T certainly does. It's been $18 to upgrade to a new iPhone ever since the original.
post #23 of 65
Quote:
Originally Posted by some internet dude View Post

Sprint, ATT, Tmobile, charge around 30 for new line activation, but they don't charge for upgrades.

Yes they do
post #24 of 65
Time to bail the 2 year upgrade carousel. Given all the wifi availability, I'll keep my iPhone 4 (and iPad 3) for the simple convenience of contacts, emails, reading, video, browsing, ad infinitum, and buy a dumb-phone family plan with no forced data and unending charges. Unless you're compensated by your company, a dumb-phone is pretty smart.
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post #25 of 65
Quote:
Originally Posted by jrfields321 View Post

ATT is now charging $36. I received the info this morning when I check my contract status by dialing *NEW#

Looks like they raised it. It was $18 when I upgraded in October. Now it's the same as the new customer activation fee.
post #26 of 65
Quote:
Originally Posted by JupiterOne View Post

AT&T certainly does. It's been $18 to upgrade to a new iPhone ever since the original.


I am confused by this article. Where exactly does the $30 fit in?

If someone has an iPhone 4S (16 GB) and they upgrade to the new iPhone one year into their contract, how much do they pay?

(assuming the price remains the same $199)

I thought that I paid $75 ETF last time but after checking AT&T website it says:

Early Termination Fee
$325 minus $10 for each full month of your Service Commitment that you complete

That would calculate to $205 if you were 12 months into your contract.

What am I missing?

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post #27 of 65
Quote:
Originally Posted by darrylk1 View Post

Looks like they raised it. It was $18 when I upgraded in October. Now it's the same as the new customer activation fee.

Wow, that's F*cked
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post #28 of 65
Quote:
Originally Posted by mstone View Post

I am confused by this article. Where exactly does the $30 fit in?

If someone has an iPhone 4S (16 GB) and they upgrade to the new iPhone one year into their contract, how much do they pay?

(assuming the price remains the same $199)

I thought that I paid $75 ETF last time but after checking AT&T website it says:

Early Termination Fee
$325 minus $10 for each full month of your Service Commitment that you complete

That would calculate to $205 if you were 12 months into your contract.

What am I missing?

This is an Upgrade fee. In addition to the ETF, it's for the privilege of being able to buy a new phone and lock yourself into a new 2 year contract.
post #29 of 65
Quote:
Originally Posted by yensid98 View Post

Why isn't the DOJ investigating this insane business practice?

Because Americans keep electing conservative politicians with the mandate that business can do no wrong, regulations are evil, and we want "smaller government." If you want stuff like this to stop, show it in November.

(No, I'm not trolling. I'm 100% serious. The only way you get consumer protection is to vote for politicians who pledge it instead of those who shun it.)
post #30 of 65
Quote:
Originally Posted by bongo View Post

What the article doesn't seem to include is that AT&T, Sprint and T-Mobile have been charging this fee for quite awhile now. AT&T was charging $18 and it sounds like they are going to raise it to $30 to match Verizon.

That's an $12 for, let's say, 10M - 20M customers that might upgrade this year. I.e., $120M - $240M more that they are "raising" to "match Verizon."

As a comparison, even the low end of that range is higher than the (supposed) $100M that DoJ claims iBooks has screwed customers over, cumulatively, since the time the "agency" model was introduced.
post #31 of 65
Quote:
Originally Posted by ktappe View Post

Because Americans keep electing conservative politicians with the mandate that business can do no wrong, regulations are evil, and we want "smaller government." If you want stuff like this to stop, show it in November.

(No, I'm not trolling. I'm 100% serious. The only way you get consumer protection is to vote for politicians who pledge it instead of those who shun it.)

Not to make it political, but the problem is, the other guys think that more regulation and higher taxes will solve everything. I am paying a lot already.

Both sides are messed-up, and we, as consumers and voters, are caught in the middle.
post #32 of 65
Quote:
Originally Posted by darrylk1 View Post

This is an Upgrade fee. In addition to the ETF, it's for the privilege of being able to buy a new phone and lock yourself into a new 2 year contract.

I don't understand where the fee is warranted. No one at AT&T has to do anything. The Apple store rep did all the work selling and activating my last phone. Is this charge to everyone or just people who buy their phone through the carrier?

I'm planning to buy the unlocked version next time so I'm wondering if they will charge me to activate it, not that $30 is that big of a deal.

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post #33 of 65
Quote:
Originally Posted by anantksundaram View Post

Not to make it political, but the problem is, the other guys think that more regulation and higher taxes will solve everything. I am paying a lot already.

Both sides are messed-up, and we, as consumers and voters, are caught in the middle.

Exactly. Neither side is perfectly right and both sides hold blame. Any other belief is fallacy.

Originally Posted by helia

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Originally Posted by helia

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post #34 of 65
Quote:
Originally Posted by ktappe View Post

Because Americans keep electing conservative politicians with the mandate that business can do no wrong, regulations are evil, and we want "smaller government." If you want stuff like this to stop, show it in November.

(No, I'm not trolling. I'm 100% serious. The only way you get consumer protection is to vote for politicians who pledge it instead of those who shun it.)

You may not be trolling, but that just means you don't understand that your favorite politicians do the exact same things as the ones you hate, they just put a friendly face on for you.
post #35 of 65
Quote:
Originally Posted by ktappe View Post

Because Americans keep electing conservative politicians with the mandate that business can do no wrong, regulations are evil, and we want "smaller government." If you want stuff like this to stop, show it in November.

(No, I'm not trolling. I'm 100% serious. The only way you get consumer protection is to vote for politicians who pledge it instead of those who shun it.)

You may be well intentioned, but I believe it doesn't matter who you elect. Congress with majority democrats passed bank reform legislation in 2009 to protect against all the evil things banks were doing to steal money from poor people. Now banks just find different ways to nickel and dime people, mostly the same poor people that the legislation was supposed to help. (eg. no more free checking accounts, but if you carry a high enough balance you still get free checking)

The same would be the case with phone companies if legislation was passed. They're going to get their money one way or another. If you close this hole they'll just go the other direction. You can't legislate business into a corner, there's always another way.
post #36 of 65
Quote:
Originally Posted by ktappe View Post

Because Americans keep electing conservative politicians with the mandate that business can do no wrong, regulations are evil, and we want "smaller government." If you want stuff like this to stop, show it in November.

(No, I'm not trolling. I'm 100% serious. The only way you get consumer protection is to vote for politicians who pledge it instead of those who shun it.)

I'm not taking one side or the other, but I have a question. Do you genuinely believe that conservative politicians are the only politicians that will screw you over for their own interests?
post #37 of 65
So, the "Can you hear me now?" network becomes the "Can you pay me now?" network.
post #38 of 65
Quote:
Originally Posted by BigBillyGoatGruff View Post

I'm not taking one side or the other, but I have a question. Do you genuinely believe that conservative politicians are the only politicians that will screw you over for their own interests?

they certainly aren't the only politicians that will screw over the electorate, but conservative politicians seem to be the only ones who vocally make it their stated mandate.
post #39 of 65
Quote:
Originally Posted by cameronj View Post

You may not be trolling, but that just means you don't understand that your favorite politicians do the exact same things as the ones you hate, they just put a friendly face on for you.

Agreed. I think it will remain that way until we have term limits on Senators and Representatives. No more career politicians. If you want to make a career out of politics you have to move, and get elected, in a new state every 2 terms.

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post #40 of 65
Quote:
Originally Posted by mstone View Post

Agreed. I think it will remain that way until we have term limits on Senators and Representatives. No more career politicians. If you want to make a career out of politics you have to move, and get elected, in a new state every 2 terms.

I approve of the term limit idea (would require a constitutional amendment, and it would have to be brought up by a convention, as Congress would NEVER do that on their own), but that's not enough.

Make it illegal for politicians to hold office, or at least make it logistically (within the mindset of the people) impossible to get elected if you're a politician.

If you want to hold office, have an actual career in an actual field first. Sure, USE politicians to handle the process of you BEING elected, but if you're a politician, you should NOT be allowed to hold office.

We need accountants in Congress. We need businessmen. We need regular people who have shown through actual work in their field that they are successful and can improve said field (or others) by your being in power.

Oh, look at me; this is a Verizon idiocy thread, not politics! Heavens.

To be back on topic, I reiterate my belief that the telecoms need shut down and investigated for their highway robbery.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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