Better late than never. Following a leaked internal document earlier this week, Verizon Communications Inc. (NYSE:VZ) Wireless has made its new Edge program official. Edge is Big Red’s new early upgrade program that hopes to compete with T MOBILE US INC (NYSE:TMUS) Jump and AT&T Inc. (NYSE:T) Next.
Verizon Communications Inc. (NYSE:VZ) Edge is fairly straightforward. There are no contracts or fees, and Verizon is offering a payment plan to finance the device. Customers can upgrade after six months so long as they’ve paid for 50% of the retail price. There is no subsidy to speak of, and Edge is geared toward customers who shun service contracts. The new plans launch at the end of August.
AT&T Inc. (NYSE:T) spreads out the device’s price over 20 months, while Verizon Communications Inc. (NYSE:VZ) splits it into 24 monthly payments. Neither program requires a down payment, undercutting T MOBILE US INC (NYSE:TMUS) in upfront costs. AT&T effectively requires customers to pay for 60% of the cost (12 months out of 20), while Verizon will accept 50%.
Verizon Communications Inc. (NYSE:VZ) says you can upgrade after six months, but if you do so, you’ll find yourself on the hook to pay the difference. After six months, you’ve only paid 25% of the price, so you’ll need to pay the difference out of pocket if you want to upgrade. On a $600 smartphone, that’ll cost you $150 if you want to upgrade immediately after six months.
The real kicker is the service plan. T MOBILE US INC (NYSE:TMUS) now unbundles the service cost from the device cost. AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) are hoping that customers stay on the pricier service tiers, which are priced to include a subsidy recovery. If customers choose the pricier plans, even on a month-to-month basis, AT&T and Verizon effectively get to charge higher prices without shelling out a subsidy.
