AT&T Doubles Upgrade Fee, Mainstream Media Yawns

This is what happens when competition is, basically, non-existent. On Friday, Engadget reported that AT&T would be doubling its upgrade fee from $18 to $36.

Wireless devices today are more sophisticated than ever before. And because of that, the costs associated with upgrading to a new device have increased and is reflected in our new upgrade fee. This fee isn’t unique to AT&T and this is the first time we’re changing it in nearly 10 years.

What, exactly, does AT&T have to do when a customer upgrades her phone? I don’t know, because I’ve never gone through AT&T to get an upgrade. When I “upgraded” from a Blackjack to an Apple iPhone 3GS, I did so at the Apple Store. Ditto when I upgraded to an iPhone4. And I’ll get my iPhone5 at an Apple Store, too.

But AT&T is our provider. Does that mean that I have to pay this $36 even though Apple is doing the work, whatever work is entailed — work that I could have done myself had I had Apple send the phone to my house.

It’s bad enough that we are tied into a two-year agreement for service, an agreement that ostensibly subsidizes the cost of phone but that does not drop in price after the two-year “subsidy” is over. Nor is there a lower contract price for a phone that has been paid for — you know, if you buy a used one or share a used one with a friend.

I suppose current customers are being asked to cough up more dough to pay for AT&T’s disastrous $6.2 billion bill associated with its ill-advised attempt to buy T-Mobile as well as pension accounting (ie, paper loss). Verizon also posted “a $2 billion loss due to a change in its pension accounting.”

AT&T revenue for the fourth quarter, of course, was up 4 percent: from $31.4 billion last year to $32.5 billion this year.

cNet analysis of AT&T’s fourth quarter earnings explains why AT&T wants more money when customers upgrade. For both AT&T and Verizon:

… the iPhone made up more than half of the carriers’ smartphone activations. Without the device, they would have faced a continued slowdown in its postpaid subscriber growth.

There is nothing from mainstream media — print or electronic — about this story as of this writing.

4 Comments

  1. “There is nothing from mainstream media — print or electronic — about this story as of this writing.”

    Probably due to the fact it is not really that important in the scheme of things happening. These are luxury items and you have a choice to subsribe to these things or not.

    You also have a choice. To buy the service or not. No one is forcing that choice on you.

    Isn’t time people decide to make their own choices and stop thinking government should run interference for them?

  2. At one time telephones were considered luxury items, but due to changing times they became necessities.

    So it is with cell phones. They have almost made the transition from “luxury” items to being items of necessity. The reason AT&T can get away with the price increase is because cell phones are items of necessity… Many people no longer have a landline, using their cell phone as their primary phone. AT&T knows it customers will pay the fee. And it’s a fairly innocuous fee too. You only pay it once when you upgrade. It’s just another way AT&T nickels and dimes its customers to death.

    I’ve had AT&T for cell phone service since 2005 (when I finally broke down and got my first cell phone). Overall I haven’t been very happy with them.

  3. AT&T sucks. Their internet sucks, their service sucks, and now my phone which I pay $90/month for the smart phone subscription is cut off from most of the features because the phone has hit its data limit doing things I never wanted it to do in the first place. Thanks AT&T. And because I have a 2 year contract I can’t even switch service even if they are not carrying their end of the bargain. At least not without tanking my credit.

    I recently set up an office, decided not to go with COMCAST because I wanted all my communication with one company, ideally for ease of management with regards to billing, issues, whatever. Turns out AT&T Service is just as crappy as COMCAST, but the speeds are way worse because well, its DSL vs Fiber Optic. They have missed 2 appointments to come out and fix it and each time I start over again at Square 1.

    This is a big problem. What do you do when all the big service providers suck? I switched from BofA to Wells Fargo, and turns out Wells Fargo is just as bad. You know who I don’t have issues with? PG&E, the water company, and my garbage collection. The Free Market is making a stronger case every year for govt management of basic services.

  4. @SlamFu : the markets you describe are not “free” — they are monopolies. Adam Smith, bless his heart, did not like monopolies. “Free market” dogma in America is perverted. See the book “Cornered.”

    @StockBoyLA : there is a reason that public utilities are regulated. Cellphone service is NOT regulated like copper service — which is why AT&T et al have enticed (pulled) people into using cellphones instead of landlines.

    @RP : AT&T and Verizon are duopolies. This clear market concentration is (a) the result of government regulatory oversight and (b) public infrastructure. Thus, price gouging like this SHOULD be covered by news organizations. They did cover it (some) on Monday.

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