Verizon Insists Higher Phone Upgrades Are Being Used To Enhance The Network Instead Of Make Up Revenue Decline

from the uh-huh dept

Wed, Jan 11th 2017 10:45am — Timothy Geigner

Within Karl Bode's post about Verizon's insistence that all of the people who continue to use grandfathered unlimited data plans don't actually exist was a brief note about the company's decision to increase the cost to upgrade the phones themselves. As mentioned in the post, Verizon claimed that the reason to push upgrade costs from $20 to $30 was due to increasing costs. Fleshing that out a tiny bit, a Verizon spokesman commented for Ars Technica.

When asked why the upgrade fee was raised, a Verizon spokesperson told Ars, "These fees help cover increased cost to provide customers with America’s largest and fastest 4G LTE network."

As both Karl's and the Ars post note, there's a bit of a problem with this statement. Verizon's earnings reports are publicly available, you see, and the company's own reporting details a fairly significant decline in operating costs compared with the previous year. So, what was sold as a need to make up for increased expense appears instead to be something else. Once the post went live, another Verizon spokesman reached out to Ars again.

After this story published, Verizon responded that it was referring to "ongoing costs to maintain and enhance the network," but did not provide any further details.

Making the additional comment rather useless, I would say. We still have source material in the form of Verizon's own financial statements that suggest lower expenses for the company, not higher. What you do find, in addition to that, is a slightly smaller decline in revenue. It would make some sense for the company to try to make up for a revenue decline by raising upgrade fees. If that were the case, however, why not just say so? Why instead invoke the expense and the spectre of the future without anything concrete to back that up? It's not like the telecom industry has some sterling reputation when it comes to how and when it deploys the cost of maintaining or upgrading their networks as the reason to take certain actions. And why on the one hand charge extra fees to burgeon the network while at the same time eliminate data plans that could take advantage of a beefed up service?

The only thing that's certain in this is that Verizon appears to be dipping ever-further into tactics that are designed not to provide its customers with additional value, but to instead merely prop up a decreasing revenue number.

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Filed Under: costs, network, revenue, upgrades
Companies: verizon

20 Comments

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slipstream, 11 Jan 2017 @ 10:55am

Just another example of why "the free market" doesn't work.
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- Blake, 11 Jan 2017 @ 11:05am
  
  Re:
  If by "free market" you mean a highly regulated market with government granted monopolies and subsidies.
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  - Anonymous Coward, 11 Jan 2017 @ 11:20am
    
    Re: Re:
    Pine away all you want but, again, there is no such thing.
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    - compujas (profile), 11 Jan 2017 @ 12:25pm
      
      Re: Re: Re:
      No such thing as what? If you mean wireless carriers are actually operating in a free market, then please, tell the class how a small business startup can get into the wireless provider arena when it requires purchasing licenses for the electromagnetic spectrum from the FCC (the Government part of the government granted monopolies). The last spectrum auction pulled $19.6 billion (with a B) for 5 blocks of the spectrum. How does a small business enter that market without being a MVNO and paying huge royalties to the big boys?
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      - VonFluffington (profile), 11 Jan 2017 @ 1:47pm
        
        Re: Re: Re: Re:
        How, precisely, would you recommend wireless service work without regulating the spectrum?
        
        The way I see it we'd likely end up with a jumbled mess of incompatible services.
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      - Anonymous Coward, 11 Jan 2017 @ 5:08pm
        
        Re: Re: Re: Re:
        Hello?
        
        Free Market - of course.
        
        No such thing ever, never will be either.
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That Anonymous Coward (profile), 11 Jan 2017 @ 11:01am

And of course this extra money is being set aside to deal with maintaining the network & not to upgrade the CEO's office with a make over.

It's a fun system we have going. They demand more & more money to do things they agreed to do, because they took the money they got before to pad their wallets and not for the intended use.

As things get better, faster, stronger, cheaper they find ways to pocket the savings and pretend it costs more because more money is always good. It is a pity that there isn't anyone with enough juice to call them out on their lies & punish them for it.
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- Anonymous Coward, 11 Jan 2017 @ 11:43am
  
  Re:
  "It's a fun system we have going. They demand more & more money to do things they agreed to do, because they took the money they got before to pad their wallets and not for the intended use."
  
  Sounds like the Government.
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  - VonFluffington (profile), 11 Jan 2017 @ 1:48pm
    
    Re: Re:
    Care to flesh that thought out a bit? Or do you not have anything to add besides a one liner?
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  - Anonymous Coward, 11 Jan 2017 @ 5:09pm
    
    Re: Re:
    Sounds like capitalism
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Anonymous Coward, 11 Jan 2017 @ 11:22am

Can someone explain to me why you even need to pay upgrade fees anymore? Since there's no longer any phone subsidies, can't you just buy the unlocked phone directly from the manufacturer and activate it on the carrier of your choice without their involvement? Previously the upgrade fee was a way for the carrier to recoup a portion of the subsidy. Since they're not subsidizing the phone, why should you have to buy it from them?

Personally I'm on Apple's iPhone upgrade plan. I signed up while on AT&T. Since then I've switched to T-Mobile. Apple doesn't know or care what carrier I'm on anymore. I should get a new iPhone later this year and should be able to activate it on the carrier of my choice. I'm not sure if other handset manufacturers have their own upgrade plans, but you could simply buy the phone outright instead, since you're paying the same amount.
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- compujas (profile), 11 Jan 2017 @ 12:32pm
  
  Re:
  Yes, and I think if you do just that (purchase from the manufacturer), there is no upgrade fee, because in VZW's eyes you're bringing your own phone, not upgrading. I think the upgrade fee used to actually be the cost associated with transferring IMEIs on your account. It's understandable if you're buying a phone in the store and requiring an associate to manually do the transaction in the system for you, but with the internet now you can buy the phone from VZW and sign into your account to transfer service to a different phone. It should really just be the cost of doing business, like credit card fees.
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Mononymous Tim (profile), 11 Jan 2017 @ 11:33am

More like greed and there's no law preventing them from doing it.
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DannyB (profile), 11 Jan 2017 @ 11:36am

Why Verizon needs more money
Verizon needs more money to pay for the increasing cost to acquire Yahoo, which is becoming more valuable by the day.

Yahoo having adeptly navigated two decades of tech industry changes should make Verizon shareholders proud.

(do I need a sarcasm tag?)
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claygordon (profile), 11 Jan 2017 @ 11:50am

What would Kellyanne Conway say?
Should we take what Verizon says at face value?

Or ... should we look into their hearts?

Oh. And by Verizon I also mean AT&T, Comcast, et al.
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Uriel-238 (profile), 11 Jan 2017 @ 12:50pm

Infinite regression...
These fees help cover increased cost to provide customers believable justifications for increasing their fees.
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Dan, 11 Jan 2017 @ 1:42pm

Unlocked phones
see there are these things called "Unlocked Phones".
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- Uriel-238 (profile), 11 Jan 2017 @ 8:10pm
  
  Re: Unlocked phones
  Better yet, there are phones that never were locked in the first place.
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Groaker (profile), 11 Jan 2017 @ 3:46pm

Why would Verizon even bother to make such a statement. It is like a business saying our purpose is to make money. It is after all their fiduciary responsibility to their owners.
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- Anonymous Coward, 11 Jan 2017 @ 5:11pm
  
  Re:
  "It is after all their fiduciary responsibility to their owners."
  
  You are using words corp[orations do not understand, for example, responsibility.
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