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Verizon bumps smartphone subsidy upgrade wait time to full 24 months

post #1 of 49
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iPhone-owning Verizon customers may have to wait a little bit longer before upgrading to the next iteration of Apple's smartphone, as the nation's largest carrier announced on Friday that it was extending the wait period on device upgrades to a full two years.

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"In alignment with the terms of the contract, customers on a two-year agreement will be eligible for an upgrade at 24 months vs. today's early upgrade eligibility at 20 months," the carrier said Friday in a post (via The Verge) to Verizon Wireless' News Center. Customers with contracts expiring in January of 2014 will be the first to be affected by the policy change.

Verizon's Friday announcement also tipped the full end of the carrier's New Every Two program, which granted customers a $30 or $50 credit toward a new phone depending on their monthly access tier. The program ended in January of 2011, but Verizon allowed customers to use their expired credits. As of April 15, the carrier will no longer honor those credits.

Verizon also says that customers can continue to share upgrades on accounts, so long as those upgrades are within the same device category: feature phones can be upgraded to smartphones, and tablets can be upgraded to newer tablets, but a smartphone's upgrade cannot, for example, be used for a new tablet.

Given the increasing complexity and expense of the mobile devices customers carry, the upgrade cycle is something of a double-edged sword for wireless carriers. In order to attract consumers to their networks, they must carry the latest devices. Consumers, though, typically are not interested in paying the full cost for these devices up front. The carriers, therefore, subsidize the devices, making the money back over the length of a contract and holding out cheaper upgrades in the future to entice customers into staying with them.

Verizon's Friday announcement gave no reason for the extension of the upgrade wait period. The carrier, which sold 6.2 million iPhones in the fourth quarter, has seen record smartphone adoption numbers. The carrier also saw five million new subscribers over the course of 2012.

In the same quarter, though, pension liabilities and expenditures stemming from Hurricane Sandy pushed Verizon to a quarterly loss of $1.48 per share.

Verizon competitors AT&T and Sprint appear, for now, to be holding to the 20-month upgrade schedule.
post #2 of 49
Not really a big deal in my opinion. Its not like your phone dies or something. Whats another 4 months.

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post #3 of 49
They gave no reason? I'll give you a reason: Their service blows. The towers decimate the phone's batteries when you're on the Internet, the call quality is junk, and now there is more competition than ever. That is all.
post #4 of 49
Their benefit was to lock a customer into a new phone before they could switch to a new carrier without an ETF fee.

If they move it to 24 months they lose that leverage but that's at least 4 months more of service. Surely the bean counters have looked at who, why and when people switch carriers, as well as what they think they will gain in profits by keeping people another 4 months even if they do lose some immediately thereafter.

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post #5 of 49
Originally Posted by AppleInsider View Post
Verizon competitors AT&T and Sprint appear, for now, to be holding to the 20-month upgrade schedule.

 

Someone forgot to send out their collusion memo.

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There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

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post #6 of 49
Quote:
Originally Posted by Shogun View Post

They gave no reason? I'll give you a reason: Their service blows. The towers decimate the phone's batteries when you're on the Internet, the call quality is junk, and now there is more competition than ever. That is all.

It's because they are largest US carrier and they do a large committed following that they can offer this without back lash. If there service really did blow they would instead be forced to attract more customers through incentives. When you see a centive it's because the company has the control position.

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #7 of 49

A longer wait might signify something that's coming in the future RE: Apple's new phone(s).

Perhaps they know something that the general public doesn't yet.

 

Perhaps the rumors of a cheaper, contract-free iPhone are in the works and Verizon wants to prevent people from upgrading to a contract-free phone.

less revenue in phone sales for Verizon then.

 

Just a hunch.

post #8 of 49
Verizon CEO: Going contract-free would be 'pretty easy' but I think we will just screw our customers instead.
post #9 of 49

Perhaps they are preparing to institute a device payment plan. By default you pay for your device over the first 24 months of the contract.

post #10 of 49
It makes sense of an accounting point of view. On a 24 month contract around $15 of your bill is paying back the subsidy. To them the 20 month thing means they lost $60 of payback per person. And of course they want that money

From a customer pov the best move is phones that can bounce between all four carriers, bought unlocked and with the carriers forced into something akin to the T-Mobile system where phones and service are separate. Then we can shop and move around and they will be forced to improve costs and systems to keep us

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post #11 of 49
Quote:
Originally Posted by Tallest Skil View Post

 

Someone forgot to send out their collusion memo.


That is one of your funnier comments.

post #12 of 49
Hmmm wait. Can they unilateraly change terms and conditions without you insta-cancelling your subscription in the US?

Real question from a European who knows that a major provider who tries this here loses millions ^^

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post #13 of 49
Quote:
Originally Posted by charlituna View Post

It makes sense of an accounting point of view. On a 24 month contract around $15 of your bill is paying back the subsidy. To them the 20 month thing means they lost $60 of payback per person. And of course they want that money

 

Exactly.

 

Heck, even 24 months @ $15 isn't enough to pay back the $400 or so that a carrier has to pay Apple on top of the $200 the customer pays up front.

 

Smartphone subsidies are higher than ever.  Carrier profit reports are constantly dragged down by the money they have to invest in these customer loans.

post #14 of 49

The headline should have just said:

 

Verizon Hates Their Customers

 

Quote:
Originally Posted by charlituna View Post

It makes sense of an accounting point of view. On a 24 month contract around $15 of your bill is paying back the subsidy. To them the 20 month thing means they lost $60 of payback per person. And of course they want that money

From a customer pov the best move is phones that can bounce between all four carriers, bought unlocked and with the carriers forced into something akin to the T-Mobile system where phones and service are separate. Then we can shop and move around and they will be forced to improve costs and systems to keep us

 

Not to mention that they don't bother to drop your rate by that $15 or $20 in the 25th month...

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post #15 of 49
Quote:
Originally Posted by charlituna View Post

From a customer pov the best move is phones that can bounce between all four carriers

I suspect either the next iPhone or the iPhone 2014 will offer a single version which is capable of supporting any and all carriers globally, more or less.
post #16 of 49
Quote:
Originally Posted by Shogun View Post

They gave no reason? I'll give you a reason: Their service blows. The towers decimate the phone's batteries when you're on the Internet, the call quality is junk, and now there is more competition than ever. That is all.

 

I'm a bit disappointed as this means I won't be able to upgrade my iPhone 5 to the iPhone 5s sooner...I planned to use my daughters upgrade and give her my iP5...but VZ service is quite awesome, I have none of the problems you've described. 

 

* I suspect that if a customer were to call & speak with a manager, this could be waived.  I've had great luck with them in the past.

post #17 of 49
Quote:
Originally Posted by bryanl View Post

Perhaps they are preparing to institute a device payment plan. By default you pay for your device over the first 24 months of the contract.

I hope so. The current set-up whereby we (implicitly) continue to 'pay' for the device (since there is no post-24 month price break) is a blatant consumer rip-off. I am surprised that there hasn't been a suit. And disappointed that neither Congress nor FCC has looked into this.

post #18 of 49
Quote:
Originally Posted by charlituna View Post

To them the 20 month thing means they lost $60 of payback per person. And of course they want that money

 

I think you meant "To them the 20 month thing means they lost $60 of pure profit per person. And of course they want that money".

post #19 of 49

Must only be for new customers - the Verizon website still says that my next upgrade is August 2014, and I got my phone last December.
 

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post #20 of 49
Quote:
Originally Posted by KDarling View Post

 

Exactly.

 

Heck, even 24 months @ $15 isn't enough to pay back the $400 or so that a carrier has to pay Apple on top of the $200 the customer pays up front.

 

Smartphone subsidies are higher than ever.  Carrier profit reports are constantly dragged down by the money they have to invest in these customer loans.

They do not pay $600 per phone. That is retail cost, not wholesale. Even TMobile is making some profit off the $575 iPhone 5

post #21 of 49
Quote:
Originally Posted by bryanl View Post

Perhaps they are preparing to institute a device payment plan. By default you pay for your device over the first 24 months of the contract.

 

So, you would think at the end of the contract your monthly bill would drop to signify you now own your phone, but noooo! Instead they continue milking that cow customer for all it's worth.

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post #22 of 49
Quote:
Originally Posted by Shogun View Post

They gave no reason? I'll give you a reason: Their service blows. The towers decimate the phone's batteries when you're on the Internet, the call quality is junk, and now there is more competition than ever. That is all.

 

Their service sucks?!  Have you ever used Verizon?  They have data coverage everywhere and calls never drop.

post #23 of 49
Wonder how this will impact Apple revenues? I would think a lot I their biz is people with iPhones upgrading often. That pushes that revenue out farther. I have AT&T and I get an upgrade every 16-17 months. AT&T I think cuts off time based on how high your monthly bill is.
post #24 of 49
Quote:
Originally Posted by SolipsismX View Post

It's because they are largest US carrier and they do a large committed following that they can offer this without back lash. If there service really did blow they would instead be forced to attract more customers through incentives. When you see a centive it's because the company has the control position.

Well, Captain Clever, I was going to back my wife out of Verizon ASAP, which I was hoping would be 20 months. Now they get four more months before we're gone. So I'm not sure that supports your position.
post #25 of 49
Quote:
Originally Posted by wakefinance View Post

Their service sucks?!  Have you ever used Verizon?  They have data coverage everywhere and calls never drop.

Let's see. Did I mention data coverage in my explanation of blowage? No. No I did not. Did I mention call drops? Gosh no. No I didn't. So there you go.
post #26 of 49
Quote:
Originally Posted by Mindcrime View Post

Wonder how this will impact Apple revenues? I would think a lot I their biz is people with iPhones upgrading often. That pushes that revenue out farther. I have AT&T and I get an upgrade every 16-17 months. AT&T I think cuts off time based on how high your monthly bill is.


If I am paying T-Mobile, for example, less then I can afford to upgrade more often. In fact, my guess is that the resell value of a one year old iPhone easily covers the upfront cost of a new iPhone.
post #27 of 49
Originally Posted by Shogun View Post
Let's see. Did I mention data coverage in my explanation of blowage? No. No I did not. Did I mention call drops? Gosh no. No I didn't. So there you go.

 

Okay, but neither of your statements are true, either.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

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post #28 of 49
Quote:
Originally Posted by Tallest Skil View Post

 

Okay, but neither of your statements are true, either.

The verizon cell system uses more power than does AT&T's.  That's a fact.  So it does eat your battery if you're used to ATT.  iPhone to iPhone call quality is horrible in the Detroit area where I live, again as compared to ATT, which I had on iPhone for 4 years.  I guess I should have done all the yada yada "in my experience", "in my location", "on my phone", caveat-adding, but I thought it was kind of obvious.

 

Anyhow, bad day at work, so sorry for being an a$$.  It's all good...

post #29 of 49
Quote:
Originally Posted by Shogun View Post

Let's see. Did I mention data coverage in my explanation of blowage? No. No I did not. Did I mention call drops? Gosh no. No I didn't. So there you go.

So exactly how does their service suck?
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post #30 of 49
Quote:
Originally Posted by dasanman69 View Post


So exactly how does their service suck?

Oh my gosh, are you serious?  You must have read my initial post...  Go back and read it again

post #31 of 49
Quote:
Originally Posted by Shogun View Post

The verizon cell system uses more power than does AT&T's.  That's a fact.  So it does eat your battery if you're used to ATT.  iPhone to iPhone call quality is horrible in the Detroit area where I live, again as compared to ATT, which I had on iPhone for 4 years.  I guess I should have done all the yada yada "in my experience", "in my location", "on my phone", caveat-adding, but I thought it was kind of obvious.

Anyhow, bad day at work, so sorry for being an a$$.  It's all good...

You have no idea what you're talking about. CDMA uses less power than GSM.
Edit: you're right CDMA phones use more power than GSM phones, it's the network itself that uses less power because less cell towers are needed.
Edited by dasanman69 - 4/12/13 at 5:56pm
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post #32 of 49
Quote:
Originally Posted by Shogun View Post

The verizon cell system uses more power than does AT&T's.  That's a fact. .

 

That can be true when comparing 2G voice and data.  Depends on tower distance and congestion.  OTOH, GSM drops many more calls than CDMA, so it's a trade-off.

 

It does not apply to 3G, as UMTS for GSM uses a WCDMA radio for data (and for simultaneous voice+data), with a higher clock that can use more power.

post #33 of 49
Quote:
Originally Posted by Shogun View Post

Well, Captain Clever, I was going to back my wife out of Verizon ASAP, which I was hoping would be 20 months. Now they get four more months before we're gone. So I'm not sure that supports your position.

The good news is that nothing has gotten worse for you and your wife. The 20 month upgrade eligibility plan works by allowing you that early upgrade option for a new phone on contract. In no way did it allow you leaving Verizon for another before your contract had expired.

Consider that you have either $5 or $10 dropping off your account every month since you started the contract. If you really hate Verizon that much why not just pay the remaining ETF fee and get her to your carrier. It doesn't sound like cost is your primary concern but being on a shared plan and on AT&T will likely make up that difference in no time.

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post #34 of 49
Quote:
Originally Posted by KDarling View Post

That can be true when comparing 2G voice and data.  Depends on tower distance and congestion.  OTOH, GSM drops many more calls than CDMA, so it's a trade-off.

It does not apply to 3G, as UMTS for GSM uses a WCDMA radio for data (and for simultaneous voice+data), with a higher clock that can use more power.

Tower against tower GSM wins in power consumption, but in a equal area with multiple towers CDMA will win because the need of less towers.
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post #35 of 49
Quote:
Originally Posted by wakefinance View Post

 

Their service sucks?!  Have you ever used Verizon?  They have data coverage everywhere and calls never drop.

 

They have great coverage and line quality.   But the Verizon customer experience is hands down the worst of any company I've ever had to deal with on a continuous basis.  Not blind to the fact that being a customer of any of the other phone companies may not be great shakes either (and nothing is perfect any way you turn), but I've been counting the days until the last phone contract on our family plan is over for a long time and then it's Anywhere-But-Verizon for me.   

 

They have to have one of the WORST sites for a major tech company.   Complete mess.  Landline bills, DSL and cell are completely separate entities yet are jumbled together and keep tripping over each other on the Verizon sites.   Problems with billing are impossible to solve online.  You want to pay a bill and after five minutes feel like shooting yourself in the head, which doesn't make you feel great about being under contract.   So you stop by a Verizon store.  Don't know how it is elsewhere, but In all of their stores in NYC and its 5 boroughs there's a sense that they get the employees from the pool after McDonalds and KFC have already taken their picks.   So aside from the coverage and drop rate, yes, I would say their service totally sucks  :  )

post #36 of 49
Quote:
Originally Posted by Shogun View Post


Let's see. Did I mention data coverage in my explanation of blowage? No. No I did not. Did I mention call drops? Gosh no. No I didn't. So there you go.

 

Those are the two primary reasons why the service of a cell provider might suck.  Pardon me for assuming you had a real reason for saying Verizon was terrible.

post #37 of 49
Quote:
Originally Posted by dasanman69 View Post


Tower against tower GSM wins in power consumption, but in a equal area with multiple towers CDMA will win because the need of less towers.

 

A pretty pointless argument as no-one in the western world is trying to decide whether to build a GSM or IS-95 network anymore. 

post #38 of 49

I left Verizon several years ago and when to AT&T when the iPhone 3 came out...I've stayed with AT&T because I'm grandfathered in under their unlimited data plan.  But to be honest, their service isn't all that bad and the coverage here is Seattle is pretty solid.  Also, i can upgrade my plan after 18 months (which I did for the iPhone 5) and now that Verizon is pulling this stunt, I have zero desire to ever go back to them.  

post #39 of 49
I thought I had seen everything. I never would have imagined we'd start measuring the size of our cell towers.

it's quite pointless to do. You either have to be all inclusive which requires an exhaustive number of variables that can effect performance through a large range that is constantly changing or you have to be very specific about what you are comparing at which point it's a pointless as the actual usage depends on an exhaustive number of variables.

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #40 of 49
I can't quite work it out, Surely 20 months gives them 4 months to renew the contract for another 24 months. AT 24 months the customer might have already gone AWOL. Is it worth it? They almost appear seem to think the customer has no choice so are stuck with them anyway.
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