AT&T posted in internal memos, over the past 24 hours, that the company will be increasing its handset upgrade fee to $36. This is double the previous upgrade fee, which was $18. It also matches the standard activation fee of $36 for new customers.
The carrier cites the increasing costs of handsets in making the change. However, the change is more likely due to customers being trapped in dwindling options, and an industry set on retaining customers, over creating competitive churn.
Much of this situation can likely be attributed to AT&T, Verizon, and T-Mobile all dropping their unlimited data plans. Overage rates can mean going one kilobyte over a data cap can cost a customer anywhere from $15 to $100 on new plans from AT&T and Verizon. As such, customers are reluctant to change carriers, because they will lose their unlimited grandfathered plans.
T-Mobile has already begun throttling customers to 2G-era speeds if they exceed 2 GB per month in most cases, 3 GB on some alternative plans. Verizon will throttle any 3G customer that exceeds 2 GB, when the user is accessing an impacted cell site. Verizon customers with a 4G LTE smartphone are not throttled. Only Sprint does not throttle or cap, but makes customers agree that they reserve the right to do so in the future, in their terms and conditions.
AT&T has throttled customers in many regions to 2 GB, but claims it is based on region. Some of those regions do not match AT&T’s previously-defined territories, meaning that customers have no way of clearly knowing what the data cap is before being throttled.
One area of relief that customers may find is in the prepaid segment. While T-Mobile has waged a television campaign against Virgin Mobile and others for implementing throttling, T-Mobile postpay customers are actually throttled at lower data caps than Virgin Mobile’s own customers. With Simple Mobile, and Tracfone offering no-contract plans compatible with both AT&T and T-Mobile’s data networks (and SIM-locked devices), switching to prepaid is becoming more attractive in an era of increased fees, for less postpay data and services.
This news comes the same day that AT&T has begun to distribute LTE micro-SIMs to stores, which will give the carrier the ability to power upcoming LTE-based devices, presumably including the next iPad, and next iPhone. As currently outlined by AT&T, customers that are willing to pay the upgraded handset fee will be able to keep their unlimited, albeit throttled, data plans when upgrading to future LTE devices.