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
Facebook
Twitter
RSS
115 Comments
View All Comments
riker46060 - Sunday, August 9, 2015 - link
Nice money grab Verizon, less service responsibility by the carrier and more cost responsibility to the customer.pika2000 - Sunday, August 9, 2015 - link
So, still ~$50 a month for a paltry 1GB data, and you have to pay more for the instalment of the phone? I guess it's "good" for those that want Verizon coverage but don't want to be stuck with it for 2 years. But most people would not be switching carriers back n forth, so Verizon is simply taking advantage of those people to now pay for their phones too. Pretty neat trick, marketed as "no contract" as it resonates better to consumers."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"
Not entirely true. Even in countries like Singapore, 2 year contract is common. The difference is that in countries like Singapore and Hong Kong, carrier locking is banned by law from the get go, unlike the US. So despite contracts, there are competition as there are no barriers to switch carriers while using your current phone. That's the real issue, not the contract model. Good thing Verizon is forced to unlock their phones, but the same has to be applied to all the carriers for the market dynamics to work correctly.
LoneWolf15 - Tuesday, August 11, 2015 - link
This benefits few people but Verizon.One of the points of eliminating a subsidy is the idea that as a result, your monthly fees go down because you paid for the phone already, so they're not padding the cost into your bill.
It appears Verizon is making you pay for the phone --and then not changing the monthly cost. It simplifies their paperwork, and they get to have their cake and eat it too. You're paying as much for service as before, but now you pay full price for the phone. Further, while you're not on contract, not every Verizon phone is an easy switch to another carrier, so choose carefully.
upsidedownfunnel - Tuesday, August 11, 2015 - link
What people don't realize is that if they continue using phones at a 2 year cycle or so, they're not really saving any money. If you'll notice, Verizon just rearranged pricing so the difference in your monthly bill is very small. In fact, some people will end up paying slightly more and some might pay slightly less. The 2 year subsidy was actually the cheaper way to buy phones for people who consume less than 6GB of data. Going with Verizon's Everything plan was a little cheaper for people who consume more data. Now with this change, it all kind of evens out and everyone still ends up paying about the same. The unwillingness of people to do any math is what the carriers are counting on when they offer up these seemingly "better" plans.Murloc - Monday, August 17, 2015 - link
interesting.Here in continental Europe they're all sticking with contracts and subsidized devices when it comes to flagship phones for now.
You can also get prepaid ofc.