AT&T raises the activation and upgrade fee on 2-year contracts

Customers of AT&T that choose a two-year service agreement will be charged a little more for the options. The second largest carrier in the US has upped the activation fee from $36 to an even $40. The fee increase applies to subsidized upgrades which would renew a two-year agreement as well.

While the move is attributed to offset the “administrative and other costs” that are part of activating (or upgrading) a device, it is probably more about making AT&T’s Next program more attractive to customers.

Customers that activate or upgrade a line using AT&T Next are not charged the activation/upgrade fee, and because they are financing the cost of the phone and not technically signing a service agreement. This feature was developed in response to T-Mobile’s JUMP! Program which was Team Magenta’s industry changing model to entice people to buy more phones, more often.

Speaking of T-Mobile, the company’s outspoken CEO John Legere had some feedback to offer in the wake of AT&T’s announcement. “What happened to copying us?” Of course, when you consider that T-Mobile no longer offers its customers a two-year service agreement option with subsidized device pricing, one could make the argument that at least AT&T (and Verizon, whose fee is still $35, and Sprint who charges $36, for now) makes the option available.

While we have no inside information to back this theory, it stands to reason that two-year agreements are on the way out. Financing the full retail price of any given device nets the carrier better revenue margins on the equipment, and improves the bottom line even with the discounts that get applied to service.

source: FierceWireless