Verizon believes phone subsidies are still their best bet

[Shawn Knight]

T-Mobile sent the mobile world into a tailspin when it announced the first-of-its-kind early upgrade program last summer. The move forced all of the other major players to launch similar offerings and has led some, like AT&T CEO Randall Stephenson, to the conclusion that carriers can’t afford to continue to subsidize devices as they have for years.

Not everybody is hip to that idea, however. During a recent presentation at a Deutsche Bank conference, Verizon CFO Fran Shammo said the traditional subsidized phone model is likely to be the company’s best bet as it has done wonders for them in the industry.

That’s not to say that Verizon isn’t interested in an installment / early upgrade plan. They launched their own, called Edge, shortly after T-Mobile’s Jump last year. Shammo admitted that there are some customers out there that want the installment plan but even still, it’s not without its own set of problems.

The executive explained that if a customer signs up for an installment plan then decides to leave the carrier shortly after, they’ll be stuck with a pretty hefty bill upon exit. Obviously, that wouldn’t make anyone happy but it’s usually the carrier that loses out because the chance of someone paying an early termination fee is “next to nil” if they are already dissatisfied.

Because of this, Verizon has thus far limited its Edge upgrade plan to customers they believe will actually pay the bill. In other words, you need to have pretty good credit to quality, Shammo pointed out.

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https://www.techspot.com/news/55953-verizon-believes-phone-subsidies-are-still-their-best-bet.html

 

[MilwaukeeMike]

T-mobile's plan of not subsidizing their phones works because their monthly prices are cheap enough to cover the payment on the phone and still leave you with around $30 savings per month. I'll bet all the carriers make more by making people sign 2-year contracts and subsidizing the phone, that's why it's always been done like that. Verizon will keep doing it because they have the network to attract and keep their customers. T-mobile doesn't and they needed to change their model to attract customers.

 

[rub900]

Just buy the damn phone it is cheaper! Oh that is right all the young morons want a new iPhone. Go ahead pay out the nose. I am going buy a nexus five and save tons of money.

 

[Skidmarksdeluxe]

As rub900 said, just buy the goddammed phone you want outright and save yourself a lot of $$$. What's so complicated about that? As for me, I'm averse to making wireless carrier execs wealthy off my back.

 

[Guest]

For me it comes out much cheaper to use a subsidized plan. I upgrade every year, I'm on an old verizon family plan with 700min (we use maybe 300 a month), I'm the only smartphone user so I use my familys upgrades. The plan itself is about $20 cheaper than any plan on sprint, tmobile, att, or verizon's new plans. The fact that I can get a subsidized phone at the same price is just icing on the cake. I would have to pay even more to switch to any other plan if I wanted a new phone every year. You can say oh you have etfs, well all other carriers if you leave your contract you have to pay off the phone anyways so its pretty much the same.

 

[p51d007]

I don't know why people still use contracts. When my old at&t Dell Streak contract ran out in 2011. It was 120/month (plus tax!) & 199 for the phone. 120/month x 24= 2880.00 + 199.00 = 3079.00 over the life of the contract.
I switch to straight talk, 49.00 x 24 month = 1176.00 + 574 (unlocked galaxy note N7000) = 1750.00
3079 - 1750 = 1329 SAVED over that same 2 year period. That allows me to buy a full year of straight talk way cheaper than a month to month, or buy one heck of a new high end phone, and a 6 month straight talk card. Why people can't see that I don't get. I guess people are "conditioned" to contracts, so called "free" or cheap phones, which, in the end, are more expensive than buying one outright. If the no contract thing really takes hold, the major retailers will pressure the manufacturers to cut the prices, to get the devices in their stores, which will benefit the consumers. The only ones that wouldn't like it of course are the carriers. A locked in contract generates a dedicated income stream for them, which is why they push it, but in the end, it sucks for the consumers.

 

[rub900]

Thank you p51d007 you are my hero.

 

[Shelbyguy84]

I've tried prepaid svcs, didnt work, because Verizon is the only signal that I can get in my basement home/office; when the other carriers have true full coverage, then I, along with others in my situation, will be free to switch; until then, I'm stuck with feeding the fat cats. All the commercials tout speed, but for a lot of folks, its the signal thats important. my friends come over, they may as well leave their att and sprint phones in theirs cars, because they wont be making/receiving calls while in my house, unless they are a vzw customer...sad but true. #slavetothesignal

 

[lmike6453]

I don't know why people still use contracts. When my old at&t Dell Streak contract ran out in 2011. It was 120/month (plus tax!) & 199 for the phone. 120/month x 24= 2880.00 + 199.00 = 3079.00 over the life of the contract.
I switch to straight talk, 49.00 x 24 month = 1176.00 + 574 (unlocked galaxy note N7000) = 1750.00
3079 - 1750 = 1329 SAVED over that same 2 year period. That allows me to buy a full year of straight talk way cheaper than a month to month, or buy one heck of a new high end phone, and a 6 month straight talk card. Why people can't see that I don't get. I guess people are "conditioned" to contracts, so called "free" or cheap phones, which, in the end, are more expensive than buying one outright. If the no contract thing really takes hold, the major retailers will pressure the manufacturers to cut the prices, to get the devices in their stores, which will benefit the consumers. The only ones that wouldn't like it of course are the carriers. A locked in contract generates a dedicated income stream for them, which is why they push it, but in the end, it sucks for the consumers.

You forgot to mention that your voice service is probably less coverage, and that your data speeds are not = to ATT/Verizon LTE's