Verizon's Upgrade Fee: A Statement of Confidence

Editor's Note: This was corrected 4/13 to reflect the accurate number of AT&T press releases.

There's a lot of griping going around about Verizon Wireless's new $30 upgrade fee, even though every other major U.S. carrier charges the same sort of fee, and both Sprint and AT&T charge more. But never mind that: up until now Verizon didn't charge a fee, and now it does. What gives?

This fee is a major statement of confidence from Verizon, and it's consistent with Verizon's overall branding: to provide a premium product at a premium price. Verizon has never been a low-cost carrier; it's been the carrier that offers the best network coverage for a fee that reflects its superiority.

Let's look at the numbers, and the surveys. Verizon was the top national carrier in our Reader's Choice awards this year. In last year's Fastest Mobile Networks 20-city tests, Verizon's 4G data network smoked the competition. Even now, Verizon offers 4G LTE in far more cities than its nearest competitor, AT&T.

JD Power and Associates agrees: of the four national networks, Verizon Wireless consistently gets its top marks for network quality. Notice that I'm saying "of the four national networks." Where it's available, U.S. Cellular tends to top rankings, but USCC is hobbled by its relatively limited geographical sales area.

This has all translated into Verizon Wireless being the largest mobile-phone provider in the nation, with more than 108 million subscribers. And new postpaid subscribers, the most lucrative ones, are flocking to Verizon: in the fourth quarter of 2011, Verizon saw 1.2 million new postpaid customers, compared to 717,000 for AT&T and 539,000 for Sprint.

Verizon's customers also seem to generally trust that the carrier will take their money and invest it in network improvements. Hardly a week goes by without a press release about some new LTE city or 3G tower improvement in some obscure part of the country. Already in the first two weeks of April, Verizon has sent out 35 press releases about network improvements. Compare that to AT&T's 17 press releases. Whether or not it reflects reality, Verizon's a lot more aggressive about getting that word out.

Hidden Fees Abound
So yeah, Verizon is raising some fees because it feels it has a more compelling product than everyone else does. Makes sense to me. If you want to be outraged about something, be outraged about the ongoing hidden fees involved in wireless carriers' subsidized phone prices. Verizon, AT&T, and Sprint don't give you a choice to separate the cost of service from the subsidy on a device - you'll pay the same monthly fee whether you buy a subsidized phone or not. They're all hiding the real cost of service. (T-Mobile, with its Value Plans, is the only honest one here.)

If you have problems with Verizon's new fee, it's not like you don't have anywhere else to go. Even if you aren't in a U.S. Cellular coverage area, there are still at least three other networks in most parts of the country. I'm a T-Mobile subscriber myself, because I find their HSPA+ speeds and low prices to be a killer combination for my family. I know several people who choose Sprint because of the company's ongoing commitment to unlimited data. AT&T's iPhones run on a considerably faster data network than either Verizon's or Sprint's.

But as we've seen, consumers are still flocking to the award-winning Verizon Wireless network. It's simple supply and demand: if you're in demand, you can charge a bit more. So pony up and enjoy your 4G, or switch carriers. I'm sure we'll see prices come down if customers aren't rushing to sign up for Verizon Wireless any more.