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Verizon scraps "new every two" credit

Discussion in 'Wireless News' started by JasonLAllerdings, Jan 13, 2011.

  1. JasonLAllerdings

    JasonLAllerdings Junior Member
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    Hmm - I always liked this feature of getting a new phone and a new contract.

    Verizon quietly scraps "new every two" credit - Jan. 13, 2011

    NEW YORK (CNNMoney) -- With a rush of iPhone sales on the horizon, Verizon Wireless is getting stingier with the discounts it offers those who want to upgrade their smartphone.

    Starting next week, the company is ending its longstanding "new every two" deal. The promo gives existing customers credits of $30 to $100 off the already-discounted price of a new phone, after they have completed at least 20 months of a two-year contract.

    Email Print CommentThe change comes just days after Verizon unveiled its long-awaited iPhone, which it will begin selling next month.

    Like every other major carrier, Verizon Wireless subsidizes the smartphones it sells. A 16 GB iPhone 4 costs $200 if a customer signs a new two-year Verizon contract, but it sells for $599 without the contract. Other hot devices carry similar subsidies. For example, the Motorola Droid X costs $200 after a mail-in rebate with a two-year contract. Without the contract, the Droid X costs $570.

    Both brand-new customers and existing customers who have completed their contracts are eligible for the subsidized pricing. But Verizon's unique "new every two" deal offered customers an additional credit -- knocking a few more dollars off the discounted price of a new phone.

    Current Verizon customers who are eligible for "new every two" credits will still be able to use them toward the iPhone, shaving a few more dollars off the $200 price tag. But starting Jan. 16, Verizon will no longer offer the credit on new contracts and renewals, company officials told SmartMoney.

    The change means that those who renew their Verizon contracts next month -- when the iPhone goes on sale -- won't be able to take the credit two years from now, when they next become eligible for a phone upgrade.

    A Verizon Wireless spokeswoman confirmed the change for CNNMoney, but said the company will still be offering early upgrade incentives.

    "A simpler program is being introduced to replace the 10-year-old 'new every two' and annual upgrade programs," Verizon Wireless said in a written statement. "Customers who sign up for service on or after January 16 will still be eligible to upgrade their devices at current promotional prices well before their contract expires -- after 10 months on one-year contracts, after 20 months on two-year contracts."

    Customers under contract before Jan. 16 will be grandfathered in and can use the credit one last time. That means next month's iPhone buyers will be able to use the additional discount -- if they've been with Verizon for more than two years. With the additional credit, they'll be able to get an iPhone for $100 to $170, depending on the terms of their contract.

    First-time Verizon customers and those who are taking out new contracts but aren't eligible for "new every two" credits will pay $200 for the entry-level iPhone.


    0:00 /1:30Verizon gets iPhone - but no 4G
    Verizon has quietly trimmed its "new every two" offering before. In February 2009, it cut the program's top discount in half, paring it back from $100 to $50. Some customers who started contracts before the change are still eligible for the bigger credit.

    Ending the credit program will help Verizon stanch some of the losses it takes when customers upgrade to flashy new devices. Buyers willing to sign long-term contracts can snag new smartphones dirt cheap -- often for mere pennies -- but the carriers still need to buy the phones from their manufacturers. For the most popular phones, the cost is typically around $500 per device.

    Carriers can recoup their upfront investment through the monthly fees customers pay for service. That's why they love to lock buyers into multi-year contracts -- the longer the better. And every month a customer holds off on upgrading, the phone provider's profit margin gets better.

    But with smartphone technology improving at warp speed, customers are often impatient to get hold of the latest new creation. Early upgrade discounts can be a powerful weapon.

    In June, AT&T (T, Fortune 500) offered discounted iPhone 4 pricing to any customer eligible to upgrade in 2010. That move helped it lock in millions of contract renewals just ahead of Verizon's iPhone unveiling.

    So while Verizon's "new every two" may be ending, its discounts and subsidies won't. In the fiercely competitive wireless space, carriers need every edge they can get to lure -- and keep -- their subscribers
     
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  2. M in LA

    M in LA Mobile 28 Years Plus
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    As far as the iPhone and NE2, I can understand it. Since that phone is to be sold at a set price, NE2 would be irrelevant.

    When it comes to every other phone in Verizon's line-up? Who cares. With AmazonWireless and other authorized 3rd party retailers out there, NE2 is a moot point. I got the Droid X for $50 from AmazonWireless recently without any help from NE2. Verizon's price (in store and/or online) was $250 (with NE2 factored in) before waiting an eternity for a $100 rebate debit card, which would have made the "price" $150 overall. Yeah right!

    The only part I'm sad to see go is the option to upgrade after one year. Since eligibility for this was based on a plan price level, it was a useful option for those who it was available to. I would have finally fallen into that category now that I have the Droid X and a higher monthly plan. So much for that option...
     
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  3. JFB

    JFB Gold Senior Member
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  4. josephd

    josephd Tomorrow is another day.
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    So what does this mean, either we pay full price from VZW when we need a phone, or buy from e-bay or elsewhere? This will only be more of an incentive to not renew my contract with them.
     
  5. M in LA

    M in LA Mobile 28 Years Plus
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    The general rules for buying a phone during the contract duration hasn't changed. They've just eliminated the extra $50 or $100 credit on top of the subsidized price that has been the norm for years after the 20th month of the contract. Subsidized prices will still be available when within upgrade eligibility.

    If your price plan was high enough to allow for upgrading after 1 year, this has also been eliminated. The 20-month rule affects everybody now, regardless of price plan.

    The iPhone will cut into their profit margin, so they're getting rid of anything that could cut into it even more. This actually is VERY Verizon of Verizon to do...
     
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  6. josephd

    josephd Tomorrow is another day.
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    Yes it is Mike, they continue to have the play in our playground attitude or get out. So far from what I have seen, they have the network to support that attitude. Let's hope it stays that way, when the network gets jammed up with all the iPhone fanatics.
     
  7. SIengineer

    SIengineer New Member

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    I really think that if they drop this, they need to also drop the contract notion all together. Had a long discussion today with the local mamager of one of those large Verizon superstores. Se said the grandfather clause was going to extend to Jun 16 for old customers, so this stopped my first concern, which was just how long I have been suffering along with this lame old Blackberry TOUR wiht a lousy radio to get the LTE version of phones with the latest wifi hotspot.

    they all come out in Feb and March, but this cancel the plan 2 weesk prior nice and backdoor quiet was very upsetting to me.

    I told them to drop the 3 year contract if they feel that they can drop the 2 year terms.

    Seriously, I have been a customer of VZ since hte DAY they started. but they seem to want to treat all of us like we are going to jump ship the next day and without nice handcuffs on us, we walk. I have been with VZ for almost 20 years, yet they still insult me as bad or badly as they did in 1996. So with this, it seemed like they simply do no respect their long term loyal customers.

    Just tie them up and extort as much as possible from them.

    It costs them $1 to produce 1G of data on both EVDO and LTE. So why do we pay $50 for 5G?.....

    Oh yea... greed again...

    So I will upgrade to one of hte new LTE based phones in march and let them do their thing.
     
  8. QLR

    QLR RIP Note!
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    As far as dropping the contract requirements, that's not gonna happen because they have a few options:

    1. Prepaid... means Higher priced plans and higher priced phones
    2. Go month to month by paying full retail pricing for your phone or bring in your own device.
    3. The Exit ... most any plan on any other network is cheaper LOL

    I am getting weary of the contract anyways... I will likely let it lapse or pay a higher price for a 1 yr contract (although only VZW corp offers it from what I can tell)

    I am sad that the early upgrades and NE2 is disappearing but I am not missing them. I did an early upgrade in April and I dropped my plan down to the 700 family + data + 500 text . That change made me ineligible for another annual upgrade since my base plan is $49.20 :p. And I feel that a paltry $30 credit isn't worth a 2 year commitment.
     
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