As of August 13, Verizon Wireless is no longer going to subsidize the purchase of new cellphones. That means you can kiss that $199 price for iPhone 6 or Samsung Galaxy S6 goodbye. When you get a new phone, you’ll be asked to pay around $650 for those high-end phones, but you can do so in monthly installments of about $27 to soften the blow. Other phones will be available at other prices. Current customers can apparently continue to renew their two year contracts and get subsidized phones, according to the AP.
On the bright side, elimination of subsidies also means the elimination of two-year contracts. So you are no longer bound to remain a customer for 24 months. You will, however, need to fully pay off the remaining monthly payments on your phone if you choose to leave Verizon.
Now the big question: Since you are now paying full price for the phone, are Verizon’s monthly rates for service lower than they were? Remember, depending on the plan, they did have embedded in them a roughly $20 charge to cover the cost of that $650 phone that you got for only $199.
Old plan pricing choices:
In the old system, you had three choices: pay for the phone in full ($650), pay in 24 equal installments ($27.08), or pay $199 (with a two-year contract.)
In the new system, you only have two choices: pay $650 in full or pay it off in 24 installments of $27.08:
Besides the cost of the phone, there has always been a line charge, or a charge for the cost of the service per smartphone. The old charge was $40 per line, but if you were on “Edge,” you got a $15 monthly discount making it $25.
Data charges were separate charges also. In the old system, there were many choices with varying prices. Some examples, old/new: 3 gigs – $50/$45; 6 gigs – $70/$60.
Putting it all together, here is the old pricing for an iPhone 6 with monthly installments, on Edge, and with 3 gigs of data:
Here under the new system is pricing for an iPhone 6 with monthly installments and 3 gigs of data:
In this scenario, you are paying $10 a month less than in the former system.
So how does this compare to the old system if you had gotten an iPhone 6 for $199 upfront with 3 gigs of data? You would have been paying $90 a month ($40 for line, $50 for data) plus the equivalent of $8.33 for the phone itself, or $98.33 per month. It is now $6.25 a month cheaper.
At least in these scenarios, the new plan is a little less money, but the rate shock of paying $650 for a phone may still be too bitter a pill to swallow for some. The problem is that you don’t have a ton of alternatives since increasingly the other carriers are also moving away with subsidized telephones.