In an effort to supplement its income to cover costs, Verizon Wireless, the nation's largest mobile carrier, announced it will start charging customers a $30 fee for cell-phone upgrades. The fee comes on top of the price customers pay for the new device.

"On April 22, Verizon Wireless is implementing a $30 upgrade fee for existing customers purchasing new mobile equipment at a discounted price with a two-year contract," explained the carrier. "This fee will help us continue to provide customers with the level of service and support they have come to expect, which includes Wireless Workshops, online educational tools, and consultations with experts who provide advice and guidance on devices that are more sophisticated than ever."

Upgrades, Less Profitable for Operators

This decision to implement an upgrade fee follows a fourth-quarter decline in the company's wireless profit margins, due to the hefty subsidies it paid Apple for the widely popular iPhone. Devices like the iPhone help attract new customers and boost revenue, therefore carriers pay such subsidies to get ahead. On the other hand, upgrades are less profitable to operators. They pay a subsidy for the new device, but they often get no extra revenue from existing customers who decide to upgrade their phones.

According to BTIG Walter Piecyk, the upgrade fees could amount to $1 billion a year, boosting Verizon's profit margin by as much as 150 basis points, writes Reuters. Verizon posted a profit margin of 42.2 percent in the fourth quarter. "The incremental fee by itself is hardly going to be enough to materially curtail upgrade activity but it is yet another step by a major operator to recoup the margin reducing impacts of phone upgrades," said Piecyk, as cited by Reuters.

AT&T, Sprint Charge a $36 Upgrade Fee

AT&T, following Verizon Wireless as the second biggest U.S. mobile carrier, announced in January that it will also work on its upgrade policies this year, in a similar effort to reduce upgrade costs. Back in February, AT&T doubled its device upgrade fee from $18 to $36, according to company spokesman Mark Siegel. Before this raise, the company had charged $18 for upgrades without a price change for a decade, added the spokesman. Under its new policy, AT&T has also limited the number of upgrades it allows. Customers can now upgrade their phones only after 20 months, while previously AT&T allowed upgrades after 13 months.

The nation's third biggest mobile carrier, Sprint Nextel, charges a $36 upgrade fee.

(reported by Alexandra Burlacu, edited by Dave Clark)