Verizon quietly debuts financing plan for iPad, Android tablets
Verizon Wireless (NYSE:VZ) is offering a financing plan for postpaid customers who want to purchase a cellular-capable tablet. The financing plan dovetails with Verizon's newly introduced Share Everything shared data plans and is likely an effort to increase the number of customers who pay $10 per month to attach a tablet to those plans.
Verizon's tablet financing plan was disclosed in a report from Current Analysis titled "Shh! Verizon Wireless Has a Monthly Installment Plan for Tablets, but Don't Tell Anyone," authored by Avi Greengart and Jamie Huff. In the report, Huff and Greengart wrote that Verizon's financing plan is available to its postpaid customers and applies to any tablet costing $349.99 or more, which includes Apple's (NASDAQ:AAPL) iPad and Android tablets from Samsung and Google's (NASDAQ:GOOG) Motorola Mobility. To obtain the financing, customers must pay a $35 activation fee and a $30 finance charge (and pass a credit check), and then can break up the cost of their tablet over the course of 12 months. Greengart and Huff noted the financing plan "offers customers tablets for as low as $31.67 per month, taking the sting out of a $349 - $729 purchase."
"While financing is only offered if data service is added, there is no service contract," wrote Greengart and Huff. "Consumers can comfortably buy a connected tablet today, turn off cellular data, and use it in Wi-Fi-only mode down the road, which may encourage them to buy the connected version 'just in case.'"
Greengart and Huff noted that financing plans are common among wireless carriers in Europe, but that they are relatively rare among U.S. carriers. T-Mobile USA is the only major carrier that offers a financing plan, which applies to smartphones. The Current Analysis analysts noted that Verizon's financing plans are different from the subsidies wireless carriers typically offer on smartphones.
Verizon introduced its Share Everything shared data plans this summer, with the goal of encouraging users to add a variety of cellular-capable devices to their accounts and share a data allotment among those devices. Customers can purchase buckets of shared data starting at 1 GB for $50; each smartphone added to the account costs $40 per month and each tablet costs $10 per month.
In its third-quarter earnings, Verizon reported a boost to its EBITDA service margin due to its Share Everything data plans. The carrier said that more than 13 percent of its customer base is now on the new plans.
Greengart and Huff pointed out one notable hitch in Verizon's financing offering: "The program is completely under the radar--Verizon Wireless has done no advertising of any kind. It is going to be awfully hard to change consumer behavior if consumers don't know they have a choice."
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