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It didn’t take long for Verizon Wireless to jump into the early upgrade game.
A little more than a week after T-Mobile unveiled its Jump program and two days after AT&T debuted Next, Verizon on Thursday announced Edge, its own no-contract plan that enables customer to upgrade to a new phone after only six months.
Verizon Chief Financial Officer Fran Shammo confirmed the Edge program on an investor conference call earlier Thursday before the carrier released the full details.
While Verizon maintains that Edge evolved out of a series of plan changes it made over the last few months, the timing of the various announcements may give pause to a more skeptical observer. The close proximity of the new plans, which T-Mobile touched off with its splashy event last week, underscores the competitive environment amid a period where the carriers are starting to see slowing customers growth.
Verizon, however, managed to show continued momentum in the wireless business, adding 1 million net new customer connections in the second quarter amid a gain in profit.
Verizon Edge looks similar to AT&T Next, but with a few key differences. The plan allows customers to go on a “no-contract plan” where they pay for the full price of a phone over 24 monthly installments. But after six months, customers are able to upgrade to a new device — as long as they pay for half of the cost of their previous device and turn in their device.
So after six months, a customer would have only paid off a quarter of the price of the device. Another quarter is owed if the customer opts to upgrade after six months. Given the price, the more cost-effective option would be to upgrade after 12 monthly payments.
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“The device payment plan is an absolute win for customers who want the latest technology,” said Ken Dixon, head of marketing for Verizon, in an interview with CNET.
The plan, which will go into effect on August 25, has no upfront costs, although the first month’s payment is made immediately, and there are no program, early termination or upgrade fees, Dixon noted. The plan includes all basic phones and smartphones.
But like the AT&T program, customers are still stuck with the typical Verizon service plans, which are pricey and structured to earn back a return on the smartphone it subsidized for a contract customer.
Critics have called out the plan for being even more expensive for consumers. Rival T-Mobile dinged AT&T’s plan, noting that customers essentially “pay twice for their phone.” Verizon’s plan is structured the same way. When T-Mobile moved to a no-contract model, it slashed the price of its plans to reflect the end of the subsidy-based pricing structure.
Shammo, in an interview with Reuters, nixed the idea that Verizon would cut its service plans to match the new no-contract structure.
Dixon defended Edge, saying that it represents one option for customers who insist on upgrading their devices early. He noted that customers can opt for the traditional two-year contract structure, in which they would be eligible to upgrade to a new phone at a subsidized price every 24 months.
Sarah Tew/CNET
When factoring the broad 4G LTE roll out, Dixon argued that Edge is an attractive offer.
“At the end of the day, we deliver a better value in the marketplace,” he said.
He also argued Edge is an evolution of a few moves made over the last few months. In October, Verizon introduced a device payment plan for tablets. In April, Verizon introduced an installment plan for smartphones, splitting up the cost of the device over 12 monthly payments.
“This is something we’ve been doing,” he said.
The plan is eligible to new customers or existing subscribers who are eligible for upgrades. Customers on grandfathered unlimited data plans are out of luck; only customers on a capped plan or the Share Everything plan can sign up for the service.
Correction at 10:10 a.m PT: One reference to AT&T’s early upgrade program has been fixed. It is called AT&T Next.
