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Verizon Ends Smartphone Subsidies

Posted by Soulskill on from the times-they-are-a-changin' dept.

JoeyRox writes: Verizon has discontinued service plans that include subsidies for upgrading a smartphone. The new plans require customers to pay full price for their smartphones, either up front with a single one-time purchase, or by monthly payments. Unlike their previous subsidized plans, Verizon's new plans don't require a long-term commitment. Under the new plan, Verizon will charge flat fees for connected devices: $20 for smartphones and $10 for tablets. Subscribers will be able to pick from four data monthly packages to go with their devices: 1GB for $30, 3GB for $45, 6GB for $60, and 12GB for $80. The changes go into effect on August 13th. Existing subscribers will get to keep their current plans

4 of 155 comments (clear)

  1. Full Price Smartphones by OrangeTide · · Score: 5, Interesting

    I predict this will drive down the average price of smartphones, as consumers are going to aim for lower cost options more aggressively. Average meaning that there will still be $700+ smartphones, but there should be growth in the $199 smartphone market.

    It somewhat relates to the Apple versus Android divide, a lot of iPhone owners are using subsidized phones on contract, especially those using the latest model. When I was shopping around for pay as you go plans and a new phone, meaning I pay full price for my phone, I saw good options in my price range for Android and older iPhone models. I don't know how well Apple will fair if people are buying the previous model instead of the latest.

    --
    “Common sense is not so common.” — Voltaire
    1. Re:Full Price Smartphones by Anonymous Coward · · Score: 2, Interesting

      By the time you do the monthly payment plan via Verizon you're going to end up paying what you likely pay for the 2 year contract. I doubt there is going to be a substantial cost difference. Verizon already had/has plans of this nature.
       
      But what this does do is makes me wonder if Verizon is preempting some kind of regulations they may see coming down the pipeline that is going to force carriers to break their phones from their plans. You hear plenty of Euros on here who are saying that's how it works for them. This may be the case.

  2. They're able to call them subsidies now? by cant_get_a_good_nick · · Score: 5, Interesting

    A while back we were on Verizon, with the implicit subsidy until we paid the phone off. Two years are up, well, we did pay the phone off, and then I asked if we could have a bill reduction because of that. I asked for them to take the subsidy off. The look on the person's face was as if i just peed on them. How dare you say subsidy! We don't have a subsidy!!

    For long time, Verizon had this unmarked subsidy in their bill. A lot of people forgot about it, and then that became pure profit to Verizon. It was never marked as "phone paydown" or whatever. Since people never saw it as that they paid for months and months for something that was already paid off.

    I applaud whatever is making them more overt. TMobile maybe? TMobile has it very clearly marked in your bill.

  3. Re:Holy crap. by Anonymous Coward · · Score: 5, Interesting

    The CEO did it. AC for the known reason. He specifically said 3 years ago in internal meetings he wanted to get rid of them. The size of the loans they took out to pay for it. Well into 9 figures.

    They went from subsidizing 50 dollar phones to 700 dollar phones. The charge on the books is huge. They went from a 1-2 month ROI to basically it taking the full 2 years. What this means is they had very little wiggle room on reducing plan costs to compete. As they had to pay the subsidy anyway.