Throughout 2013, all of the major cell phone carriers introduced early upgrade plans in response to customers who were no longer happy waiting two years to be able to upgrade their phones. Over the weekend, Verizon made a slight adjustment to its Edge device payment program by allowing customers to upgrade after just 30 days -- down from six months. Despite the decrease in wait time, as with the previous plan, customers will still have to pay half the retail price of their phone before they can upgrade to a different device.
Prior to the introduction of Verizon Edge, customers with two-year contracts would be able to pay off the price of their phone in the form of monthly subsidies attached to their service bills. Over time, these subsidies would enable Verizon to earn back the money that it initially invested by selling the phones at discounted prices. In terms of overall cost, this sort of two-year contract is relatively efficient, but that has not been the case with Verizon's Edge program.
Immediately after Verizon unveiled its new early-upgrade plan in July 2013, it became obvious that people would need to shell out significant money to trade in their phones and get new ones, if they were doing so after just six months. Even to this day, Verizon has not made it very clear that customers who enroll in the Edge program are still paying the same monthly subsidy prices for the phones, just as if they were on two-year contracts.
On top of the subsidy payment is another fee that varies by device and is generally between $10 and $30 each month. By paying the Edge fee, customers can upgrade early, however they have also been paying a monthly subsidy fee for a device that they will most likely never own and instead, will trade in, so that Verizon can use the device again. When taking into account the average subsidy fee of $20 per month, someone enrolled in Edge could be paying as much as $50 per month on top of his or her regular service bill.
The Right Direction
Although upgrading every month is not something that the average consumer would ever do, allowing upgrades every 30 days does effectively remove prior time limitations.
We asked telecom industry analyst Jeff Kagan for his opinion on the changes to the Verizon Edge program. He sees the changes as a good step forward for the industry. "This is one slice of the pie. It won't apply to most customers, but it will apply to a small number of what may be valuable customers."
By giving more control to the customer, Kagan said that Verizon is doing the right thing, at least for however long the 30-day upgrade deal lasts. "What this does is [it] puts the time when a customer can upgrade in the customer's hands. On that basis, I think this makes sense and is a good idea."