Verizon CFO Fran Shammo confirmed during the company’s quarterly earnings call that Verizon Wireless was working on a new, more frequent phone upgrading scheme called Edge, but didn’t elaborate much. As it happens, that was because Verizon’s Wireless arm was just about to pull back the curtain on the program ahead of its August 25 launch.
Here’s the skinny: if you’re on one of VZW’s Share Everything plans and skip the annual contracts in favor of a month-to-month deal, Verizon will split the full retail price of that phone over 24 months. Want to ditch that phone for a new one? That’s just fine as long as it’s been at least six months since you got it and you’ve paid off 50% of the device’s cost.
Let’s say for the sake of argument that you’re eyeing up an iPhone and plan to upgrade your phone as soon as you have the option. Verizon sells the 16GB iPhone 5 for $649 sans contract, which works out to a monthly payment of about $27 over 24 months, but in order to upgrade as early as possible you’ll have to shell out $325 in that first six months — or $54 each month if you decide to pay in equal installments — on top of whatever (probably pricey) share plan costs you’ve chosen to deal with.
If all that sounds familiar, well, I can’t blame you. T-Mobile CEO John Legere revealed the JUMP early upgrade program for T-Mobile customers earlier this month, under which customers could effectively pay $10 a month in exchange for the ability to swap phones twice a year provided their devices were in good shape. Then AT&T rolled out a similar program called Next (seriously, what’s with these four letter names”) just a few days ago that’s actually a bit worse — customers who take that route will see the full cost of a device split over 20 months, which means you’ll have paid $384 by the time you first get to upgrade.
Throw in the fact that neither Verizon nor AT&T are offering price breaks on plans to offset the built-in subsidy costs (after all, you’re agreeing to pay full price for the phone over time instead of getting it much cheaper up-front with a traditional 2 year contract) and it becomes clear that avid upgraders should think carefully before embracing either of these options.
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