Don’t bet on Verizon dropping smartphone subsidies anytime soon
The past year or so has seen some changes descend upon the wireless industry in the United States. Not a lot of change, mind you, but more than we’ve seen in a long while, and much of its brunt has focused on rethinking the way smartphone sales are so intimately tied to wireless service, often by way of subsidy and contractual obligation. T-Mobile’s been at the head of this movement, but other carriers have shown varying degrees of interest in copying TMo’s actions, specifically when they let users upgrade their phones more frequently – problem is, such plans haven’t always been to the user’s benefit. Will this momentum continue, and eventually deliver us free from the specter of contracts altogether? When it comes to Verizon, don’t count on it.
Verizon CFO Fran Shammo admits that some customers will prefer to pay for their phones via installment plans, rather than having a chunk of the cost subsidized, but paints that sort of subscriber as the exception, rather than the rule. He says that at Verizon, “we believe that the subsidy model is an extremely good model. It has done wonders for us in this industry.”
Well, sure. We’re not denying that subsidized sales are good for carriers, as they let them lure in users with artificially reduced prices, rather than presenting a fair market value for phone hardware; as a result, companies trying to sell handsets for what they actually cost are at a disadvantage.
Is Shammo becoming the villain of Verizon, or is he just an easy target? In the past we’ve heard him complain about how “unlimited” data is “just a word” that “doesn’t really mean anything.”