Verizon Delays Upgrades — Wireless Users Must Now Wait 24 Months to Get Subsidized New Phones
Various U.S. wireless carriers often compete for the same customers and search for ways to lower their costs. Recently, Verizon Wireless extended the amount of time it would take for their contract customers to upgrade their cellphones. They spent billions on smartphone companies, such as Samsung and Apple, to provide subsidized phones for their customers. This service leaves a negative impact on their marginal profit. Carriers subsidize cellphones, instead of having customers pay the full price, because cellphone costs are generally more expensive than customers’ budgets. This service would attract more customers, yet limit the amount of money they would have to spend. However, competitors such as AT&T Inc. and Sprint Nextel Corp. both allow customers to upgrade their cellphones after 20 months. Verizon’s changes may turn customers away. T-Mobile USA chose a different method to attract contract customers. With the iPhone 5 coming out for T-Mobile USA, they are offering interest-free financing for customers because cellphones are full price.
Currently, many people want the newest smartphones and gadgets. Therefore, wireless carriers have to attract customers while keeping low costs. There has been more competition among wireless carriers. Therefore, each of them have to further differentiate their services to attract contract customers.
Written By: Melody Mark
Gryta, Thomas. “Verizon Delays Upgrades — Wireless Users Must Now Wait 24 Months to Get Subsidized New Phones.” Wall Street Journal. Dow Jones & Company, 13 Apr. 2013. Web. 13 Apr. 2013.