On Call: T-Mobile's unfair upgrade fee

T-Mobile is charging its customers to remain loyal. It shouldn't.

Kent German Former senior managing editor / features
Kent was a senior managing editor at CNET News. A veteran of CNET since 2003, he reviewed the first iPhone and worked in both the London and San Francisco offices. When not working, he's planning his next vacation, walking his dog or watching planes land at the airport (yes, really).
Kent German
2 min read
The MyTouch 3G: it will cost you. Corinne Schulze/CNET

Despite what you might think, I don't believe all cell phone carriers are evil. Like any big faceless corporation, they're not always going to get it right, but I'm confident that carrier execs don't just plot to screw the customer.

Yet, every so often something happens to shake that confidence. On Sunday, I accompanied a friend to the main T-Mobile store in San Francisco. He's been waiting for weeks to finally ditch his clunker Nokia 6133 and upgrade to the MyTouch 3G. As a five-year T-Mobile customer who had been off contract for three years, he was ready to sign a new contract and agree to a more expensive monthly plan with data.

We were greeted by a friendly T-Mobile sales rep and our buying experience proceeded smoothly as my friend picked out his data plan, signed the new contract, and activated his MyTouch. Just as he pulled out his card, however, the trouble started.

The rep announced that he'd have to pay an $18 "upgrade fee." Uh, pardon me? I broke in and asked why a long-time customer who was signing a new contract and was agreeing to a costlier monthly plan was subject to the fee. With a smile and a relentlessly cheery demeanor she replied that she didn't know, but that he'd have to pay it anyway.

My beef with the upgrade fee is two-fold. First off, it should be waived for customers like my friend. He had only purchased two phones during his entire five years with T-Mobile so he was eligible for an upgrade. But now he's charged for being eligible? Wireless carriers hate customer churn, so I can't grasp why T-Mobile is charging a customer to not jump ship to another carrier.

Secondly, the fee is nothing more than a way for T-Mobile to make some cash. While supplying a phone and offering service to customers costs T-Mobile money, I don't understand the inherent cost of moving a customer from one phone to another. As I see it, the fee is all about helping T-Mobile's bottom line, but isn't my friend doing that already by remaining a customer?

When I contacted T-Mobile for an explanation, a spokesperson responded that the upgrade fee helps the carrier offer great value in its device and rate plan pricing. I appreciate the response, but I couldn't disagree more. Loyal customers should be rewarded for remaining loyal, not charged for it.