Verizon to drop subsidized phone pricing in new plans coming August 13
Verizon Wireless on Friday announced a new set of core subscription plans, eliminating contract-based phone subsidies in favor of combinations based on device choices and the amount of data.
Beginning August 13, new customers will pay $30 per month for 1 gigabyte of shared data, $45 for 3 gigabytes, $60 for 6 gigabytes, or $80 per month for 12 gigabytes. Device access fees will be $20 for a smartphone, $10 for a tablet or wireless hotspot, and $5 for any other "connected device," such as a cellular-equipped smartwatch.
Up to 10 devices will be able to share the same plan. For each gigabyte over a plan's limit, however, people will have to pay $15.
In place of subsidies, subscribers will either have to buy a device outright or add two-year financing. In the case of the latter, fees will vary based on device cost.
People already with Verizon will be able to retain their existing subscriptions, or switch to one of the new ones. There may be "some restrictions" on keeping current plans, according to Verizon, but the carrier didn't elaborate.
The decision to jettison subsidies also does away with the Edge upgrade program, and follows in the steps of T-Mobile. While subsidies are useful in attracting customers, carriers often lose money on the initial device sale, and customers end up being locked into a contract that can only be escaped with an early termination fee.
Beginning August 13, new customers will pay $30 per month for 1 gigabyte of shared data, $45 for 3 gigabytes, $60 for 6 gigabytes, or $80 per month for 12 gigabytes. Device access fees will be $20 for a smartphone, $10 for a tablet or wireless hotspot, and $5 for any other "connected device," such as a cellular-equipped smartwatch.
Up to 10 devices will be able to share the same plan. For each gigabyte over a plan's limit, however, people will have to pay $15.
In place of subsidies, subscribers will either have to buy a device outright or add two-year financing. In the case of the latter, fees will vary based on device cost.
People already with Verizon will be able to retain their existing subscriptions, or switch to one of the new ones. There may be "some restrictions" on keeping current plans, according to Verizon, but the carrier didn't elaborate.
The decision to jettison subsidies also does away with the Edge upgrade program, and follows in the steps of T-Mobile. While subsidies are useful in attracting customers, carriers often lose money on the initial device sale, and customers end up being locked into a contract that can only be escaped with an early termination fee.
Comments
You'd get that amount of data plus a load of free calls for around $12 in the UK (pay as you go).
Perhaps I'm misunderstanding but it sounds like Americans really get screwed over on mobile pricing.
Actually it's $50, plus various taxes and bogus fees. You have to pay $20 for the phone line as well. The $30 is for a bucket of 1GB of data you can theoretically share with other devices, but each of those has a per-line fee as well. Yes, our mobile phone plans are crazy expensive.
An iPhone retails for $700...someone has to pay Apple for that.
If you want your carrier to pick up $500 of it, and you only pay $200...they are going to find a way to recoup that cost from you. If it means charging you more for service, AKA your monthly bill, then they will (and they have). It also means they have to lock you in to at least two years of overpriced service, to ever hope to turn a profit on you.
Instead, your carrier will offer you an installment plan that allows the customer to spread out the cost of the phone over 12-20 months, and ultimately pay somewhere around $400 for the phone instead. In turn, they have lowered their device fees and service fees, so the average user is now paying the same or less than they ever did before on their total monthly bill, even with the cost of the device (GOOD!). And the cherry on top is that you're no longer locked in to a 2 year contract with no upgrade privileges....instead they know you want to upgrade your device every 12 months, and have made that possible too.
And as always, there is absolutely no consumer or carrier advantage to buying the device outright for full retail price.
You would be right. The only positive thing here is that the plans are apparently shared across devices. On the other hand it appears that they Nicole and fine people with additional fees.
There are pay as you go plans in the USA but often they include very little. Frankly the situation is so bad in the USA I'm thinking about giving up one of my data plans. I just don't know if I really want to give up on iPhone vs my iPad. I use a lot of data on my iPad and a trivial amount on the iPhone.
In the end I think the term is a "royal screwing".
I know the UK has a competitive market, but with three (I think) big players in the U.S. market you'd expect them to be fighting tooth and nail over price.
Nothing you can do about it I guess, one of the rare situations where the U.S. is more expensive than the UK.
Americans get screwed pretty hard on mobile service, but Europeans are AFAIK still charged to place any calls to mobile numbers. Where as Americans are charged to receive calls on their mobile devices unlike European numbers. Once everyone pretty much went to unlimited calls, all "lines" in the USA and Canada became shared plans that cost 80$/mo and additional devices cost 15$/mo
Canadian wireless service is still highway robbery. It gives Americans a point of reference for how much they could still be screwed by AT&T and Verizon.
Yep, American mobile companies really **** us. On the other hand my mate from England says the data over there is much much slower, not sure about other countries.
It appears that the bill will now be lower by that $20 per month. In other words, not much of a difference from what is currently being done.
Am I wrong about this?
Any consideration of UK vs US mobile phone/data pricing should keep in mind land area and population density.
UK 255 people per km
US 33 people per km
While it is true most of the population in both countries live in cities, the nature of national competition in US mobile business means a widespread national infrastructure is required.
Long story short, the cost to cover the population UK<US which increases potential competition.
I think this report does not contain all the relevant facts. As I understand it, approximately $20 per month in the existing 2-year contract is the additional charge to consumers from Verizon for the supposed "subsidy." That's $480 that the consumer is already paying (leaving aside minor rounding issues associated with time value of money) for the handset over a two-year period
It appears that the bill will now be lower by that $20 per month. In other words, not much of a difference from what is currently being done.
Am I wrong about this?
Right now if you are on a two year subsidized contract with Verizon they charge 40.00 access charge for each smart phone. If you own your phone or were on their Edge plan it's 25.00 access charge for 4GB and under, 15.00 access charge for 6GB and over.
I think this is going to hurt Verizon, out of the four major carriers they have the largest percentage of contract customers.
So, if I am understanding you correctly, they're charging consumers at least an extra $15 per month ($40 – $25) -- i.e., at least $360 over the life of the contract -- for letting them pay a lower handset fee up front?
What I am trying to understand in all the news reports, including this one is, how's this a 'subsidy' for the handset?
Yep, American mobile companies really **** us. On the other hand my mate from England says the data over there is much much slower, not sure about other countries.
Depends on the carrier and the persons location, I get around 50MB 4G connection where I live and work so no complaints there.
Collusion. The protection agencies are bought and paid.
So, if I am understanding you correctly, they're charging consumers at least an extra $15 per month ($40 – $25) -- i.e., at least $360 over the life of the contract -- for letting them pay a lower handset fee up front?
What I am trying to understand in all the news reports, including this one is, how's this a 'subsidy' for the handset?
Yep. Then you're paying at least 199.00 for the handset. So over the course of a 2 year contact theres really no savings and someone is locked into that carrier.