Verizon bumps smartphone subsidy upgrade wait time to full 24 months

Posted:
in iPhone edited January 2014
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.

phones


"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.
«13

Comments

  • Reply 1 of 49
    macxpressmacxpress Posts: 5,418member
    Not really a big deal in my opinion. Its not like your phone dies or something. Whats another 4 months.
  • Reply 2 of 49
    shogunshogun Posts: 362member
    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.
  • Reply 3 of 49
    solipsismxsolipsismx Posts: 19,566member
    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.
  • Reply 4 of 49
    tallest skiltallest skil Posts: 43,399member


    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.

  • Reply 5 of 49
    solipsismxsolipsismx Posts: 19,566member
    shogun wrote: »
    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.
  • Reply 6 of 49
    antkm1antkm1 Posts: 1,441member


    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.

  • Reply 7 of 49
    macbook promacbook pro Posts: 1,605member
    [URL=http://appleinsider.com/articles/13/04/07/verizon-ceo-going-contract-free-would-be-pretty-easy]Verizon CEO: Going contract-free would be 'pretty easy'[/URL] but I think we will just screw our customers instead.
  • Reply 8 of 49
    bryanlbryanl Posts: 67member


    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.

  • Reply 9 of 49
    charlitunacharlituna Posts: 7,217member
    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
  • Reply 10 of 49
    hmmhmm Posts: 3,405member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    Someone forgot to send out their collusion memo.





    That is one of your funnier comments.

  • Reply 11 of 49
    lightknightlightknight Posts: 2,312member
    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 ^^
  • Reply 12 of 49
    kdarlingkdarling Posts: 1,640member

    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.

  • Reply 13 of 49
    john.bjohn.b Posts: 2,740member


    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...

  • Reply 14 of 49
    macbook promacbook pro Posts: 1,605member
    charlituna wrote: »
    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.
  • Reply 15 of 49
    allenbfallenbf Posts: 993member

    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.

  • Reply 16 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.

  • Reply 17 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".

  • Reply 18 of 49
    e1618978e1618978 Posts: 6,075member


    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.

     

  • Reply 19 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

  • Reply 20 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.

Sign In or Register to comment.