Verizon (News - Alert) has announced that after April 22, existing customers wishing to upgrade their phones will have to pay a $30 upgrade fee to buy a new device with a two-year contract.
“This fee will help us continue to provide customers with the level of service and support they have come to expect which includes Wireless Workshops, online educational tools and consultations with experts who provide advice and guidance on devices that are more sophisticated than ever,” according to a company source.
Verizon acknowledges it is not the only mobile carrier upping its fees for upgrading handsets; AT&T (News - Alert) also raised its upgrade fee from $18 to $36.
Verizon is currently directing customers to a trade-in program that grants discounts as well as recycles old handsets.
The move comes as an apparent attempt to stave off losses from subsidized phones. The cell phone vendors sell them at a discount, hoping to make their money back on the service plans, which are apparently not enough to offset the cost of the phones, especially the newer smartphones.
Apple's iPhone (News - Alert) in particular seems to hit the companies hard. "The AT&T wireless model is broken," Kevin Smithen, a wireless analyst at Macquarie Securities, told the Los Angeles Times. "AT&T is basically subsidizing Apple's (News - Alert) revenues and profit growth."
Verizon, one of the carriers of the iPhone, failed to meet performance expectations in the fourth quarter of 2011, despite selling over 4 million of them.
Verizon is also competing with AT&T to develop and deploy LTE (News - Alert) networks. AT&T recently challenged Verizon with major upgrades to its on LTE network.
Edited by Braden Becker