Verizon Wireless (NYSE:VZ) is making substantial changes to its phone upgrade policy just weeks before it will launch Apple's (NASDAQ:AAPL) iPhone.
The carrier is going to end its "New Every Two" program, according to a report in the Wall Street Journal. The program gave existing customers a credit of $30 to $100 toward the purchase of a new phone on contract every two years. Beginning Jan. 16, the nation's largest carrier will stop offering the credit to new subscribers and will not re-enroll subscribers in the program once they use the credit. Existing customers can get the credit if they renew their contract before Jan. 16, which is more than two weeks before Verizon customers will be able to pre-order the iPhone.
In addition to ending the New Every Two program, Verizon customers will no longer be eligible for a discounted phone upgrade starting at 13 months into their 24-month contract. Instead, they will have to wait until 20 months into the contract to get the discount.
The changes are designed to protect margins, analysts said. By cutting down on how much it subsidizes phone upgrades, and by making customers wait longer to upgrade, Verizon is looking to increase profits.
Such changes are not without precedent. AT&T Mobility (NYSE:T) increased the early upgrade fee on its smartphones from $75 to $200 in October. The changes did not apply to the iPhone, and the early upgrade fee for feature phone and quick messaging device customers remained at $75.
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