Verizon: Edge customers now must pay off smartphone before upgrading, but get to keep old phone

Verizon Wireless (NYSE: VZ) is changing its Edge equipment installment plan (EIP) so that customers will need to pay off the full cost of their devices before they upgrade. However, they will now be able to do so at any time and will be able to keep their smartphones once the device is fully paid off instead of having to turn them in.

Starting May 31, Verizon Edge customers can upgrade at any time after they pay off their device in full. Verizon Edge is available for postpaid smartphones, feature phones and tablets.

Previously, Verizon said customers needed to wait 30 days after they purchased their device to upgrade, and needed to pay off 75 percent of the device's cost. Customers also needed to turn in their device when upgrading. Now, although customers will need to pay off more of the device's cost before upgrading, those restrictions are dropping away.

Verizon noted that Edge customers can recycle their old device for an account credit, donate it to Verizon's Hopeline initiative to help domestic violence victims, or give the phone to a friend or family member to activate.

Verizon spokesman David Samberg confirmed to FierceWireless that Edge customers will no longer be able to upgrade after paying off 75 percent of their device's cost. Edge customers can pay $0 down upfront for devices or put money down toward the device's total cost. Then customers pay off the remaining cost of the device over 24 months. At any point in time customers will be able to pay off the full cost of the device.

"It's just the simplification of it," Samberg said in explaining the carrier's changes to its Edge EIP. "Customers want these price plans to be simple, very straightforward, very transparent."

Verizon still offers two-year contracts and subsidized devices, but Samberg noted that Verizon is currently seeing 50 percent of customers who are buying new smartphones or upgrading to a new smartphone choosing Edge, up from 39 percent at the end of the first quarter.

Verizon Edge customers also receive a monthly line access discount on Verizon's More Everything shared data plans; they get a $25 per month discount on plans with 6 GB of data and higher and a $15 discount on plans with 4 GB and lower.

Speaking earlier this month at a Jefferies investor conference, John Stratton, Verizon's newly appointed EVP and operations president for its wireless and wireline division, said Verizon is looking for ways to simplify its offerings and business overall.

"One of my concerns in looking at the business, I would like to streamline and simplify everything we can," he said. Stratton also indicated Verizon might go to an Edge-only model if customers clearly wanted that. "If there were a reason to go Edge only, we would do that," Stratton said.

Other carriers are making similar moves. AT&T Mobility (NYSE: T) customers will no longer be able to purchase smartphones with two-year contracts at some national retail and local dealer locations by June 1, according to multiple reports. However, AT&T will still be offering two-year contracts to customers in its other retail and online channels.

AT&T said 65 percent of its postpaid smartphone gross adds in the quarter came from its AT&T Next equipment installment plan, up from 58 percent in the fourth quarter. Further, AT&T has said that more than 30 percent of its postpaid smartphone base was on AT&T Next at the end of the first quarter, and that 62 percent, or 35.4 million, of its postpaid smartphone subscribers were on no-device-subsidy Mobile Share Value plans. Those plans typically have discounted service pricing.

T-Mobile US (NYSE:TMUS) started the trend to EIP programs more than two years ago. At the end of the first quarter, 92 percent of the carrier's branded postpaid customer base was on a no-contract Simple Choice plan, which do not come with subsidized devices.

Sprint (NYSE: S) said 53 percent of its postpaid smartphone sales were on an equipment installment plan or a leased plan in the first quarter, up from 46 percent in the fourth quarter. In the first quarter Sprint said 37 percent came from leasing and 16 percent came from installment billing.

For more:
- see this Verizon post

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