Verizon Wireless to charge $30 fee for upgrades

Reuters News
Posted: Apr 11, 2012 2:54 PM
Verizon Wireless to charge $30 fee for upgrades

NEW YORK (Reuters) - Verizon Wireless will start charging customers a $30 fee for cellphone upgrades, on top of the price they pay for the new device as the company looks to supplement its income to cover its costs.

The change at the biggest U.S. mobile provider follows a fourth-quarter decline in its wireless profit margins, which came under pressure from hefty subsidies it had to pay Apple Inc <AAPL.O> for the popular iPhone.

Carriers pay such subsidies because devices like the iPhone help to attract new customers and boost revenue.

However, upgrades can be less attractive to operators because despite paying a subsidy for the new device, mobile companies often get no extra revenue from existing customers who switch phones.

Verizon Wireless, a venture of Verizon Communications <VZ.N> and Vodafone Group Plc <VOD.L>, said the fee would help it "provide customers with the level of service and support they have come to expect". For example, it cited wireless workshops, online tools, and expert advice on devices.

The company said such a fee was not unique to Verizon Wireless. AT&T Inc <T.N> said in January that it would tighten its upgrade policies this year to help reduce its costs for handset upgrades, but has not provided details.

(Reporting by Sinead Carew; Editing by Dale Hudson)