Wireless

by Timothy Geigner


Filed Under:
costs, network, revenue, upgrades

Companies:
verizon



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

from the uh-huh dept

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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  • identicon
    slipstream, 11 Jan 2017 @ 10:55am

    Just another example of why "the free market" doesn't work.

    reply to this | link to this | view in chronology ]

    • identicon
      Blake, 11 Jan 2017 @ 11:05am

      Re:

      If by "free market" you mean a highly regulated market with government granted monopolies and subsidies.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 11 Jan 2017 @ 11:20am

        Re: Re:

        Pine away all you want but, again, there is no such thing.

        reply to this | link to this | view in chronology ]

        • icon
          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?

          reply to this | link to this | view in chronology ]

          • icon
            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.

            reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 11 Jan 2017 @ 5:08pm

            Re: Re: Re: Re:

            Hello?

            Free Market - of course.

            No such thing ever, never will be either.

            reply to this | link to this | view in chronology ]

  • icon
    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.

    reply to this | link to this | view in chronology ]

  • identicon
    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.

    reply to this | link to this | view in chronology ]

    • icon
      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.

      reply to this | link to this | view in chronology ]

  • icon
    Mononymous Tim (profile), 11 Jan 2017 @ 11:33am

    More like greed and there's no law preventing them from doing it.

    reply to this | link to this | view in chronology ]

  • icon
    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?)

    reply to this | link to this | view in chronology ]

  • icon
    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.

    reply to this | link to this | view in chronology ]

  • icon
    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.

    reply to this | link to this | view in chronology ]

  • identicon
    Dan, 11 Jan 2017 @ 1:42pm

    Unlocked phones

    see there are these things called "Unlocked Phones".

    reply to this | link to this | view in chronology ]

  • icon
    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.

    reply to this | link to this | view in chronology ]

    • identicon
      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.

      reply to this | link to this | view in chronology ]


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