It looks like Verizon is playing the long game when it comes to device contracts. Reports surfaced Thursday that it’s offering 36-month contracts for all devices, dropping shorter equipment installment plan (EIP) timeframes.
According to a Verizon spokesperson, the 36-month device payment plan will replace the previous 30-month plan. Customers can still pay off their phone at any time – or buy a phone for the full price outright, but the move gives them more time to pay off devices – and stay with Verizon.
The policy applies to a range of devices, from cheap $160 phones to the higher end $1,000 flagship devices, according to Droid Life.
Wave7 Research confirmed it’s seeing 36-month plans offered in Verizon stores, a plan that was promoted at AT&T last year. And it certainly looks like a by-product of the shift to three dominant nationwide carriers as opposed to four – with retention being the name of the game here.
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The positive spin on the offer is it means a lower monthly cost for the customer, said Jeff Moore, principal of Wave7. And the negative take? “We’re back to 2010 again,” he said.
Years ago, T-Mobile started offering the installment plan model that others followed. “Now, we’re sort of back to the contract plan model,” he said, adding: “This is an industry movement, not just Verizon.”
A Wave7 review of online deals by T-Mobile today showed 24- and 30-month offers. “They’re not there yet, but that question is sort of hanging in the air at this point: Is T-Mobile going to move their payment options as well?”
Although the industry historically places a lot of emphasis on customer acquisition, it's no longer all about that, Moore said. “The game is all about having very low churn and locking people in for as long as you can.” Of course, if the carriers have their way, they’ll be locking customers into their most expensive plans.
AT&T has put up some “pretty good results” in recent quarters, with its “best deals for all" schtick that pertains to existing and new customers, and Verizon’s move appears to be in reaction to some of that, he said. However, there’s also pressure on the 5G network front from T-Mobile and increasing competition from cable companies.
“They need to lock down their customer base and the 36-month option is a good way of doing that,” he said.