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Verizon Businesses Cellphones The Almighty Buck News

Verizon Ends Smartphone Subsidies 155

Posted by Soulskill from the times-they-are-a-changin' dept.
JoeyRox writes: Verizon has discontinued service plans that include subsidies for upgrading a smartphone. The new plans require customers to pay full price for their smartphones, either up front with a single one-time purchase, or by monthly payments. Unlike their previous subsidized plans, Verizon's new plans don't require a long-term commitment. Under the new plan, Verizon will charge flat fees for connected devices: $20 for smartphones and $10 for tablets. Subscribers will be able to pick from four data monthly packages to go with their devices: 1GB for $30, 3GB for $45, 6GB for $60, and 12GB for $80. The changes go into effect on August 13th. Existing subscribers will get to keep their current plans
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Verizon Ends Smartphone Subsidies More

Verizon Ends Smartphone Subsidies

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  • So essentially, no change in the bill from what I'm seeing right now.

    • Depends on how you use your phone. If you don't tend to get the latest and greatest phone, you'll save money. If you tend to keep your phone longer than 2 years, you'll save money. I do both, so this looks like a win for me.

      • I think they're finally bowing to the practice of allowing unlocked phones.

        However, in the process, they're raising everybody's bill! Because they're charging the same amount, if not more, but they're not subsidizing your phone purchase anymore.

        Ridiculous. Especially since THEIR cost/minute has been going steadily down. I had reasons for not doing Verizon. And over time, it has looked like those reasons were good.

        • Re: (Score:2)

          by mysidia ( 191772 )

          but they're not subsidizing your phone purchase anymore.

          Then everyone should switch to ATT next time they need to upgrade their phone.

    • It looks like Verizon's cheapest service option for Android is the $20 connection fee, plus $30 for the 1GB service.

      Tracfone will give you Android on exactly the same towers for $20 for for a 3-month plan, no connection fee.

      The Tracfone subsidiaries (PagePlus, StraightTalk, Net10) will also give you Verizon service at several different price points.

      You can bring your 4G Verizon phone and avoid a new hardware purchase. If you bring it to Tracfone, you'll get triple the face value of your refills.

      You can also

    • So essentially, no change in the bill from what I'm seeing right now.

      Stay optimistic. It's so rare these days.

  • Full Price Smartphones (Score:5, Interesting)

    by OrangeTide ( 124937 ) on Friday August 07, 2015 @03:16PM (#50271263) Homepage Journal

    I predict this will drive down the average price of smartphones, as consumers are going to aim for lower cost options more aggressively. Average meaning that there will still be $700+ smartphones, but there should be growth in the $199 smartphone market.

    It somewhat relates to the Apple versus Android divide, a lot of iPhone owners are using subsidized phones on contract, especially those using the latest model. When I was shopping around for pay as you go plans and a new phone, meaning I pay full price for my phone, I saw good options in my price range for Android and older iPhone models. I don't know how well Apple will fair if people are buying the previous model instead of the latest.

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      By the time you do the monthly payment plan via Verizon you're going to end up paying what you likely pay for the 2 year contract. I doubt there is going to be a substantial cost difference. Verizon already had/has plans of this nature.

      But what this does do is makes me wonder if Verizon is preempting some kind of regulations they may see coming down the pipeline that is going to force carriers to break their phones from their plans. You hear plenty of Euros on here who are saying that's how it works

      • By the time you do the monthly payment plan via Verizon you're going to end up paying what you likely pay for the 2 year contract. I doubt there is going to be a substantial cost difference. Verizon already had/has plans of this nature.

        I also notice they don't charge interest on those monthly payment plans. There's still some subsidizing going on...

        • There's still some subsidizing going on...

          Subsidization, or built into the advertised price of the phone?

    • Re: (Score:2)

      by mlts ( 1038732 )

      If a cheap smartphone has a SDxC slot, for most things, it will do just as well as a flagship phone for a lot of people.

      All and all, smartphone prices are lower than they were about 8-10 years ago, when a high end HTC Windows Mobile phone (HTC Athena for example) would run you $1200, and that with a two year plan on top of it.

      With phones starting to hit the "good enough" market point like how desktops and laptops have done, I wouldn't be surprised to see Android as an OS adapt to this in the next year or so

      • Re: (Score:2)

        by karnal ( 22275 )

        This is already the case. Look at some of the pay as you go phones for cheap - you can get an android device that is absolutely solid for $10 on sale. The LG Optimus Fuel, which is $10 at Kroger stores around the US right now has 512MB RAM, dual core processor and almost 2GB of onboard - plus a 4GB Microsd card included. Runs KitKat.

    • Re: (Score:2)

      by tlhIngan ( 30335 )

      I predict this will drive down the average price of smartphones, as consumers are going to aim for lower cost options more aggressively. Average meaning that there will still be $700+ smartphones, but there should be growth in the $199 smartphone market.

      It somewhat relates to the Apple versus Android divide, a lot of iPhone owners are using subsidized phones on contract, especially those using the latest model. When I was shopping around for pay as you go plans and a new phone, meaning I pay full price for

    • There is a whole world out there that has never had subsidized phones and one of the major U.S. carriers has never sold the iPhone subsidized.

    • I don't think it'll do much to the average (mean) price of smartphones. The median price will probably drop though. In other words, more people will be buying lower priced phones, while the price of high-end phones wealthy people buy will go up. That's pretty much how the rest of the computer industry works (graphics cards are an extreme example, with people who can afford high-end cards paying 3-4x more for roughly 2x the performance).

      As for Apple vs. Android, I've suspected or a while that Android b

    • Re: (Score:3)

      by MrL0G1C ( 867445 )

      Or people will hang on to their phones longer, I bought my smart-phone over 2 years ago and it still copes nicely, still has good battery life and now I'm saving a lot of money vs the habitual up-grader and their 'subsidised' contract. Of course if you look at the cost of those contracts you see you're just paying a ton a month instead.

      The Verizon prices are huge compared to UK prices, you get 6GB + unlimited talk+texts for $24 here and $8 a mo gets you 250mins/250texts/250mb data (or more).

      • Either way, I've got a short position on Apple's stock. There's no way they can keep milking the margins they are out of a single tech product... if I hear one more time how someone's iPhone only cost them $100-200...

  • And they're still charging too much for the amount of data.

    No thanks.

    • Re: (Score:2)

      by tepples ( 727027 )

      How would you recommend to use the same spectrum to move more data to more customers?

    • I agree. I'm currently paying $40 a month for Unlimited talk, text, and data ( 5GB at full speed), with caller ID and voicemail. I'm in Canada on Wind. Only downside is that it's only unlimited when I'm in the city. Works great for me since I don't tend to travel that much, and I'm not going to pay every month for something that I will only use a couple weeks out of the year.

    • Verizon Rep: "We have a 4GB plan for $120 a month...."

      David Beckham: "That is not a good deal."

  • It will be interesting to see how this impacts third party retailers like Best Buy, Costco, etc. I doubt the higher price per customer will make up for the volume of customers who will delay or avoid purchases at full price (particularly at the mid-to-high end). Will retailers continue to offer discounts on phones as a loss leader or take the hit to their revenue? Likewise, I expect demand for second hand phones to increase as well (leading to higher prices there).

    It will also be interesting to see how t

    • Will retailers continue to offer discounts on phones as a loss leader or take the hit to their revenue?

      Retailers typically get a kickback for new activations and renewals processed through their registers, so they have some leeway to go below cost and remain profitable.

      I assume they will push for cheaper phones, as electronics stores usually see higher margins from cellular (as opposed to computers, gaming consoles, appliances, and games/movies/music).

    • Now that new expensive phones almost all have IMEI numbers, if there's a stolen phone blacklist shared among carriers, that list could also be used to enforce payment for phones bought with loans. If vendors can get this sort of cooperation from carriers to make lending money for phone purchases less risky, there's certainly a big difference in the interest rates for secured loans and the ones for credit cards. Maybe Best Buy could sell ~$700 phones for 15% down + $10 for the credit check + 6% interest (and
  • Sounds like a long-overdue simplification of their ridiculous & Byzantine pricing structure. Too late for them to keep me as a customer, but a step in the right direction.

  • A lot of people are going to choke on the idea of paying full price. $199 every 3-4 years doesn't seem like a big deal. $700 for a new iPhone sounds fucking horrible.

    I also wonder how this will affect corporate customers as well who are used to getting say a 5c free or cheap from Verizon for their employees?

    • Boon to companies like OnePlus (unfortunately, doesn't work on VZ) in the long run.

    • Re: (Score:2)

      by Jaime2 ( 824950 )

      Next step: do what AT&T did - offer financing (not technically the next step since they already offer this). Instead of upgrading your contract every two years and getting a discount on a phone, you finance a new phone every two years. One big difference is that with the finance model, your bill goes down if you keep the phone longer than the finance term. In the old model, if you didn't upgrade, you continued to pay the price that had the subsidy baked in.

      This also helps with customer retention - as lo

      • Re: (Score:3)

        by tepples ( 727027 )

        Next step: do what AT&T did - offer financing

        And T-Mobile even before that.

        • It is kind of funny watching the rest of the US "big 4" (of which TMo is the smallest) copy T-Mobile. Explicit loans (or purchases) instead of "subsidized" purchases (that you pay more for in the long run), unlimited talk and text as standard features, paying off your ETF if you switch from another carrier and turn in your old phone, etc. In the end, though, it's good for us all.

          Have any of them caught on to the free international roaming (free text and low-speed data, cheap voice over cell or free over WiF

    • A lot of people are going to choke on the idea of paying full price. $199 every 3-4 years doesn't seem like a big deal. $700 for a new iPhone sounds fucking horrible.

      Or a couple hundred bucks for a mid to low end Motorola phone running Android and with a readily unlockable bootloader, which sounds pretty decent, eh? I only wish my Nexus 4 had held out long enough for the 2GB model to appear.

    • In some ways it's better than the old way. Here's how it works( same type deal from US cellular ) with US Cellular:

      Want phone X which is $700 > Pay $700 OR pay $700 / #months in contract per month. Flagship phones like galaxy S6 are ~$40/ month + data package ( unlimited text, MMS, and voice included ). It turns out to be about the same, or cheaper than the old voice + text + data packages usually, then cheaper once the phone is paid for.

      Oh, and with US Cellular ( probably verizon too) you can pay the p

    • They offer a payment plan. It used to be $40 for a smartphone and $0 to $300 for the phone on a 2 year contract. Now it's $20/month and $5-30/month for the phone if you get a payment plan. If you want to pay less than you were, just pick a phone that costs $20/month or less.

    • A lot of people are going to choke on the idea of paying full price. $199 every 3-4 years doesn't seem like a big deal. $700 for a new iPhone sounds fucking horrible.

      Well, it should be easier to stomach when the price of the plan goes down by $30 a month because you are not subsidizing a phone. Wait, the price of the plan doesn't change? Oh, nevermind, they are just screwing us then.

    • If someone wants to buy a cheap TV for $200 do they insist on getting financing from the manufacturer? No, they use their credit card. Why would a phone be any different? I also don't get it why anyone would want to buy a phone from Verizon in the first place. Do people want to buy a toaster from their electric company or a car from their local gas station? Carriers should be in the business of providing a monthly data allotment and nothing more. Hopefully, this change is the first step towards a more

    • A lot of people are going to choke on the idea of paying full price. $199 every 3-4 years doesn't seem like a big deal. $700 for a new iPhone sounds fucking horrible.

      The way T-Mobile does it, there's really not much difference from paying $199 every few years. T-Mobile charges $20/mo if you don't pay for the phone in full. So over a 3 year contract that's $720. Add the $199 you paid up front and you've paid $920 in total for your subsidized phone. Not much different than if you'd bought it with a 3 yea

  • They're able to call them subsidies now? (Score:5, Interesting)

    by cant_get_a_good_nick ( 172131 ) on Friday August 07, 2015 @03:22PM (#50271311)

    A while back we were on Verizon, with the implicit subsidy until we paid the phone off. Two years are up, well, we did pay the phone off, and then I asked if we could have a bill reduction because of that. I asked for them to take the subsidy off. The look on the person's face was as if i just peed on them. How dare you say subsidy! We don't have a subsidy!!

    For long time, Verizon had this unmarked subsidy in their bill. A lot of people forgot about it, and then that became pure profit to Verizon. It was never marked as "phone paydown" or whatever. Since people never saw it as that they paid for months and months for something that was already paid off.

    I applaud whatever is making them more overt. TMobile maybe? TMobile has it very clearly marked in your bill.

    • Re: (Score:1)

      by Anonymous Coward

      Telstra do a similar thing, subsidized phone prices are usually not listed, but if you pick a lower plan and higher priced phone, you may pay somehwre between $6 and $11/month for the phone. This is removed at the end of the contract, but the rest of the subsidy isn't. You have the option to recontract and get a new phone, or a BYO contract (12 months) which usually offers the higher plan for the lower price (ie Medium plan for the cost of the Light plan).
      But most people do neither and Telstra rake it in.

    • Sad thing is, even with Verizon's analog to my own T-Mobile plan, Verizon is still the more expensive option. I own my phone outright, I'm not paying TMo a subsidy for the phone, and VZW is still 10$ more expensive at minimum.

    • AT&T does something very similar, but even more underhanded. I just had an old iPhone die on me, so I went in search of a new phone. As someone who had very little to no experience with buying smartphones (the iPhone was handed down by a family member) I quickly learned how badly you get screwed buying from any carrier.

      I did some research first, and found out that AT&T sells new phones at rates far higher than you would pay on Amazon or anywhere else. Let me give the example of my phone, the HTC One

    • TMo was the first of the big 4 to go this route, yeah, and the rest of the industry seems to be following them. Good for them, and for all of us.

      Tempted to ask if you did, in fact, piss on the Verizon rep. They could have used it, I think.

      I had to deal with that company for a while (foolishly bought into a two-year contract, and as a student I didn't have the spare cash to pay an ETF plus this was before any of the carriers were really that good policy-wise) and by the last few months I was counting days re

      • Re: (Score:2)

        by eWarz ( 610883 )
        Bad for apple and samsung of course. The problem is that, while CellCos are hoping that they will make more money, it really isn't going to happen. When joe bob finds out that buying 5 iphones will add $150 to his cell phone bill, he'll go for another, much cheaper carrier. Keep in mind that carriers made money off the phones as well. Do you really think apple charges verizon $650 for an iphone? No, verizon got it for around $325 and resold it for $650...It was easier when people could say 'it's going

    • I ran into the same thing. They told me I could have a new phone for "free", but no rate reduction for having paid off my current phone. I told them that was too bad for them and fired them. That was a few years ago, and I have no regrets.

    • yea t-mobile and at@t moved to this style so of course the rest are going to.
  • Maybe this will make buying a Nexus phone finally make sense. Too bad the "Google Play Edition" program is dead. This could be good news for open source phone projects, and Firefox OS.

    • Maybe this will make buying a Nexus phone finally make sense.

      Not unless they give you socketed, upgradable storage. If you will do anything the least bit unauthorized with your phone, even making application backups, you're better off with a card slot than without one.

      • I'm not sure how they can do that efficiently. The SD specification requires that cards bigger than 32 GB use the exFAT file system, which is patented by Microsoft. It is a violation of the spec for a device to require reformatting such a card to something more sensible like UDF. Even if the phone manufacturer can afford to pay the SD and exFAT royalties, patented file systems must run in user space, which in theory makes them slower. Or has this been not a problem in practice?

        • I don't care if they follow the specification, and I'm perfectly happy if they just make the eMMC slot available to me.

        • http://opensource.samsung.com/... [samsung.com]

          As far as I can tell, most companies just ignore the "can't be patented, or must have royalty free licensing for everyone" part of the the GPL.

        • Re: (Score:2)

          by mlts ( 1038732 )

          The HTC M8 and M9 came with SDxC card slots, and they are quite happy with 128 GB cards.

          However, these are their flagship, top dollar phones, so the license for exFAT is probably baked in somewhere for the device cost, or perhaps amortized against their entire lineup. Similar with the patent license for Android's parts that Microsoft holds. As for exFAT, it runs as a native filesystem under Linux, and not through FUSE.

          Since the Linux kernel is still GPL v2.0 licensed, having a binary blob as a filesystem

    • Re: (Score:2)

      by Higaran ( 835598 )
      I can't wait for the nexus phones that will come out this year. I have a nexus 5 and i just cracked my screen pretty badly, it still works, but looks like krap. No way am I going to run out and get the 6 if a new one is coming out at the end of September or early October. Nexus phones have primarily been the best bang for your buck when getting a new android.
  • that my cell phone company has managed to get me about to the old unsubsidized price over time. The trick they used on me was piling on "regulatory compliance" fees that they assume I'm too dumb to know aren't taxes (it's not a tax if you're pocketing the money).

    • Re: (Score:2)

      by tepples ( 727027 )

      The trick they used on me was piling on "regulatory compliance" fees that they assume I'm too dumb to know aren't taxes (it's not a tax if you're pocketing the money).

      Some of these fees are in fact taxes payable to the FCC or other government agencies, such as contributions to the Universal Service Fund. Some are the itemized cost of complying with unfunded mandates by the FCC, such as E911 and local number portability.

  • Verizon has been walking away from the subsidized phone model. You've been able to ask for a non-subsidized rate for a while now. The prices are even listed on their website. However, there is still a catch! The monthly installments for a new phone are at 0% interest. That means they are using your monthly service fees to pay the interest on the loan. Paying for the phone in full would be turning down a discount in terms of finance charges. I wonder if this will change when the new plan comes into ef
  • A $20 monthly connection fee? Sounds like Verizon has a long way to go to match Straight Talk (CDMA where I live uses Verizon) at $45 month for 5-GB of full speed data, before dropping the speed. Verizon is hoping people don't notice the $20 monthly connection fee which is added to the monthly base charge, which makes it still to expensive for me with too little data. Also, $15 per month for each GB of data over the cap is quite excessive. No thanks.

    • PagePlus also uses Verizon's network. I've got their $30/month half GB plan and it works great - no extra charges for anything.

      • Re: (Score:2)

        by eWarz ( 610883 )
        Straight talk and Page Plus both have their LTE capped at 5 Mbit down, in addition, you don't get Verizon's roaming network (which i've used in the past). Verizon's LTE network is 10 times faster. Now that it matters much, but it's worth noting. You aren't getting Verizon for that price, you are getting $45 worth of verizon at that price.

  • Data still too expensive (Score:1)

    by Anonymous Coward

    It shouldn't cost more than $25 a month, including all fees, taxes, surcharges per device for unlimited/unlimited/unlimited with maximum data rate full time.

    Why do I say that? Think for a minute, how much bandwidth is used in those ulimited talk and text plans?

    Based on some of the codecs in use, we see a wide range of usage from 21Kbps to 87Kbps, which I've averaged to 43Kbps for my math.
    G.711 - 87Kbps
    G.729 - 32 Kbps
    G.723.1 - 22 Kbps
    G.723.1 - 21 Kbps
    G.726 – 55 Kbps
    G.726 – 47 Kbps
    G.728 - 32 Kbps

  • Holy crap. (Score:5, Insightful)

    by HideyoshiJP ( 1392619 ) on Friday August 07, 2015 @03:54PM (#50271517)
    The uncarrier did it. Don't get me wrong, I'm not going to pretend T-Mobile is an angel, but I think they've truly changed the industry.

    • Re:Holy crap. (Score:5, Interesting)

      by Anonymous Coward on Friday August 07, 2015 @04:36PM (#50271691)

      The CEO did it. AC for the known reason. He specifically said 3 years ago in internal meetings he wanted to get rid of them. The size of the loans they took out to pay for it. Well into 9 figures.

      They went from subsidizing 50 dollar phones to 700 dollar phones. The charge on the books is huge. They went from a 1-2 month ROI to basically it taking the full 2 years. What this means is they had very little wiggle room on reducing plan costs to compete. As they had to pay the subsidy anyway.

    • Re: (Score:3)

      by schnell ( 163007 )

      I'm not going to pretend T-Mobile is an angel, but I think they've truly changed the industry.

      I don't know about changing the industry, but other carriers have made moves to match T-Mobile, which has resulted in more consumer-friendly options across the board. So kudos to T-Mo for that. But the whole "Un-Carrier" schtick wasn't done from altruism, it was a strategic play decided on when T-Mobile didn't have many options except to be disruptive.

      Flash back four years ago and T-Mobile is recognizing the decreasing distance between its rock and its hard place. It was the fourth largest carrier in the US

      • Deutsche did in fact shortly agree to sell T-Mobile to AT&T [wikipedia.org], which ultimately fell through due to FCC/antitrust objections.

        When this deal fell through, AT&T had to give TMobile a nice parting gift.. of 3 Billion dollars and some roaming agreements [arstechnica.com]. This is when TMobile started to become a force. Between having cash for towers and customer acquisition, and better effecgive networking, AT&T was the one that helped TMobile move forward.

    • T-mobile was the first to respond most likely because they are the smallest. Typically, smaller competitors react to market changes faster than the more entrenched. But the change to post-paid has been coming for years, as all providers were losing lots of customers to MVNO [wikipedia.org]s. It has been obvious ( looking at the market in the rest of the world ) that this is where the industry was going.

  • So it's like an expensive on-contract MVNO? If that's the case, why even bother? I can already pay full price for my phone, but not be tied to a contract and get better value (more data, etc.) for my money.

  • When someone has to pay $750 for their next iPhone up front, I doubt that they will still be willing to $80 for an "unlimited" plan with a 3 GB data cap when they can get the same plan from someone like Cricket Wireless or Straight Talk for $45 a month.

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