By Stephen Schenck | August 26, 2013 3:41 PM
When T-Mobile stepped away from traditional smartphone subsidies, it apparently sparked a bit of panic among the other carrier heavyweights in the US. Things really came to a head when T-Mobile introduced its JUMP! program, giving users more frequent opportunities to upgrade their devices (and who doesn’t love getting a new smartphone as often as possible?). AT&T was quick to swing back with its own early upgrade plan, AT&T Next, but as we mentioned when crunching the numbers, it simply wasn’t a good deal for users. Today Verizon joins the early upgrade brigade with news of its Verizon Edge plan, and it looks like this effort is repeating some of those AT&T mistakes.
Basically, Edge lets you make monthly payments towards a phone, rather than paying full price all at once, or even having a one-off payment towards a subsidized device. So, if you want a $600 phone like the HTC One, you pay one-twenty-fourth of that every month (about $25), instead of paying $200 upfront and committing to a two -year contract. Then with Edge, once you’ve had the phone for at least six months, you’re free to move on and upgrade to a newer phone – so long as the original’s at least half-paid (which normally wouldn’t happen until you were at least twelve months into your payments, so if you’re upgrading six months in, you’re still going to have to make a lump cash payment – $150 in our example).
You would have to be stupid to agree to this plan.
First off, the monthly rates are exactly the same as Verizon’s subsidized plans. That means that if you don’t rush to upgrade, treating Edge like an off-contract plan with no special early-upgrade business, you’re simply flushing all that subsidized money down the toilet. Look it at this way: get an HTC One on-contract, and you pay $200 out-of-pocket, plus whatever your plan adds up to over two years. On Edge, you pay exactly the same monthly rates, but end up paying $600 for the phone instead of $200. You’re out $400, with nothing to show for it.
Simply put, if a carrier’s charging the same rates for users with subsidized and non-subsidized hardware, someone’s getting cheated – that arrangement cannot be rationalized.
And if you do happen to upgrade every chance you get? You’re paying half of full retail price for these phones (more than subsidized prices), and you never get to keep a single one of them, handing each in as you upgrade to the next.