Verizon (VZ, Tech30) will begin charging certain customers a $20 activation fee when they add a new line to their service. The fee is a one-time charge — it won’t ever show up on your bill again after you fork over your $20 to activate a line.
The new $20 fee applies only to customers who sign up for Verizon’s new contract-free plans. When Verizon introduced its new plans in August, the company initially did not include an activation fee.
Verizon no longer offers two-year contracts to new customers. Prior to August, Verizon had charged a $40 activation fee for its various plans. Customers grandfathered into Verizon’s old two-year contracts will still have to pay the $40 activation fee when adding a new line of service, according to Verizon spokeswoman Kelly Crummey.
The news was first reported by industry blog DSL Reports.
Crummey said that the new activation fee covers the various costs of adding a line, including communicating with the telephone registry service that your SIM card should be associated with your phone number.
But Colby Synesael, analyst at Cowen & Co., noted that the activation fee will add a sizable chunk of change to Verizon’s bottom line. He expects Verizon to make $189 million in additional revenue next year from the new activation fee, adding $122 million in profit.
All three of Verizon’s biggest nationwide competitors also charge activation fees.
AT&T (T, Tech30) began charging its “Next” customers a $15 activation fee beginning in August. Next works similarly to Verizon’s device payment plan, in which customers pay off the cost of their phones over the course of time.
AT&T customers under a two-year contract pay a $45 to activate a line — the industry’s most expensive activation fee.
Sprint (S) charges a $36 activation fee for all new lines of service.
T-Mobile (TMUS) has a $15 charge for its “SIM starter kit,” which for all intents and purposes is an activation fee.