Verizon Eliminates Contracts and Device Subsidies
by Brandon Chester on August 7, 2015 2:58 PM EST
North America has always had a fairly unique pricing structure for buying mobile devices. In many places, the concept of purchasing a device for a heavy subsidy and committing to stay with a given carrier for two or three years is unheard of, but in the United States and Canada it has always been the norm. However, that dynamic has been changing as it has become more difficult for operators to subsidize expensive smartphones for the wide market of consumers. Both T-Mobile and AT&T have moved away from the original model of contracts and subsidies in favor of installment plans or simply selling devices at full price, and today Verizon announced that they will follow in their footsteps.
With Verizon's new plans, there are no more contracts and no more device subsidies. Instead, consumers pay for their phones, pay for a bucket of data, and then pay a fee for each device that they add onto the account. The base monthly data fees are 1GB for $30, 3GB for $45, 6GB for $60, and 12GB for $80. On top of the data bucket fee, users will pay $20 to add a smartphone to the account, $10 for a tablet/data stick, and $5 for a smartwatch with cellular capabilities. Additional data over the limit will cost $15 per gigabyte,
As for existing consumers, Verizon will apparently offer avenues for them to get another subsidized device when they transition to these new plans, and they can also hold onto their older plans if they desire. Verizon customers interested in the new plans can switch over when they go live on August 13.
Source: Re/code
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TheGeneral44 - Saturday, August 8, 2015 - link
You get that across the whole of the UK. Once you're overseas you have to pay roaming charges but they're not too bad anymore (for EE it seems to be £3-£4 in western Europe). It should also be noted that most of us don't hop over to another country the same way you might hop across state lines (There are language barriers + different currency + the English channel making it more difficult) so it's not much of an issue. Plus, even the £42 bill for spending two weeks in France is less that most US customers pay *each month*!Speeds vary with location but Ofcom reckons (http://media.ofcom.org.uk/news/2014/3g-4g-bb-speed... that the average speed in the UK is ~5-6Mbit/s for 3G (what many US carriers labelled as "4G" is just called 3G over here) and ~15Mbit/s for 4G (what US carriers call LTE).
jwcalla - Friday, August 7, 2015 - link
This seems like it's a lot more expensive except now you don't get a phone out of the deal.praeses - Friday, August 7, 2015 - link
Since they already have a maintenance fee per device ($20/smartphone, etc) it would be a lot nicer if they could move away from this step/tier thing and just go to a flat fee of $10/GB.DBissett - Friday, August 7, 2015 - link
I'm about to the end of my contract so I put pencil to paper about the 3 ways you can get a phone plus 2 years of service and there's practically no difference between buying the phone outright, paying for it monthly, or putting the partial payment down and signing a 2 year contract. The total cost is virtually identical, and being able to upgrade faster, i.e. as soon as the phone is paid off, is not a benefit at all to me. VZ isn't about to sacrifice top line revenue. As a matter of fact, if they sell more phones by enabling customers to buy newer phones faster then their revenue might actually increase.name99 - Friday, August 7, 2015 - link
Exactly.This myth about subsidies is the last great hope of those people who simply will not believe that some people like Apple enough to pay the cost of an iPhone --- they insist these customers must have been bribed with subsidies. People claiming these mythical subsidies have apparently never actually done the REAL calculation of the two year cost of the various alternative purchasing schemes...
v1001 - Friday, August 7, 2015 - link
Sure if you bought an $800 phone. 90 percent of people out there wouldn't be buying these super expensive phones if it wasn't for the subsidy price. And they wouldn't be buying them every two years. Now you'll have millions and millions of people that will keep their phones for double or triple the amount of time they used to. They will shop for phones more carefully and when they do buy a new phone they will spend very little. In the end as others have said, this is going to make a huge hit in the profits of phone manufacturers and cell providers. I think verizon had no choice cheaper phones that are still good quality have been flooding the market, and they are also losing customers to the competition who already has made it possible to buy cheap phone with no contract.Deelron - Friday, August 7, 2015 - link
They won't, they'll happily pay their $27 extra dollars a month for 2 years at 0% interest until the phone is paid off, hell for a large set of consumers they're going to look at the price they pay per month different and say "hey, a new 6/6s/M9/Whatever is only $10 a month more then say, a G4, I'll get the "nicer" one.People may very well keep the phone longer, but that sort of money a month isn't going to put off the people already getting high end phones, particularly given what some of these plans cost.
v1001 - Saturday, August 8, 2015 - link
Nah man people are always looking to cut costs. That's why people constantly leave other services to even save $5 a month. They had no options before and had to be on a high priced plan no matter what, so might as well trade in their phone every two years and basically get a new one. Those days are over now.v1001 - Saturday, August 8, 2015 - link
Meant to say basically get a new one for free (or almost free).Impulses - Saturday, August 8, 2015 - link
I'm generally very optimistic, but I think you give the average consumer far too much credit. They *say* they wanna save money but at the end of the day they can't be bothered to shop around and compare or do the math, they end up getting suckered by the carrier into monthly installments because it's easy and effortless.They might upgrade slightly less often (3-3.5 vs 2), but we were headed that way anyway because phone tech has reached a plateau. You're also under estimating the amount of "forced" upgrades because of theft and carelessness. I've sold three or four smartphones in mint condition and basically never had one stolen...
Looking at my immediate family and non techie friends it seems they're on an inverse ratio. My sister has killed like three phones in a row, my mother has killed every other one, my best friend's wife has had it stolen 3x at the mall, etc etc.