Verizon raises upgrade fee to “cover increased cost”—but its costs declined

Verizon Wireless is now charging a $30 upgrade fee when customers switch to a new phone, up from the previous fee of $20. The $30 upgrade fee must be paid "if you purchase a new device at retail price or through [Verizon's] device payment program," Verizon notes. The fee increase went into effect on January 5. In another change, Verizon stopped offering two-year contract renewals and device subsidies to existing customers (Verizon had already stopped offering contracts and subsidies to new customers).

When asked why the upgrade fee was raised, a Verizon spokesperson said, "These fees help cover increased cost to provide customers with America’s largest and fastest 4G LTE network." But Verizon's wireless capital expenditures have decreased, according to the company's latest earnings report. In Q3 2016, Verizon Wireless capital expenditures were $2.77 billion, down from $2.92 billion in Q3 2015, a decrease of 5.1 percent. The decrease was even bigger when looking at the first nine months of 2016. In that period, Verizon Wireless capital expenses were $7.78 billion, down from $8.47 billion for the first nine months of 2015, a drop of 8.2 percent. Verizon's total wireless operating expenses also declined more than 5 percent between 2015 and 2016. Verizon’s wireless operating revenue also declined in 2016, a fact that may help explain the fee increase.