Verizon's New Marketing Strategy: Simplified Choices, No More Subsidies

New Plans Come in 'Sizes' Small Through X-Large

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Credit: Bloomberg

Verizon is rolling out a big shift in its phone plans and smartphone pricing, but it won't necessarily make things cheaper for consumers.

The company beginning Aug. 13 will stop subsidizing new smartphone purchases, offering customers only two options: Either buy the phone outright or pay $20 per month for it. That means customers can no longer get a new discounted phone in exchange for signing a two-year contract.

The company is also rolling out data packages that "come in sizes just like other things we buy," according to a press release: small through x-large.

The "small" plan will cost $30 per month for 1 gigabyte of shareable data. Medium will cost $45 per month for 3 gigabytes of data, large will run $60 for 6 gigabytes, and x-large will extract $80 for 12 gigabytes of data. Each size comes with unlimited talk and text, though if you use extra data, it's a hefty $15 per additional gigabyte.

The plans are available for both users with a single line as well as those sharing data among multiple devices.

If the plans are easier to get your head around than some, they aren't always cheaper for customers, which differentiates the strategy from Verizon's rivals. Sprint, which was just supplanted by T-Mobile as the No. 3 carrier in the U.S., earlier this summer aimed a price-cutting promotion at T-Mobile and AT&T's prepaid customers. Sprint's Boost Mobile prepaid unit offered T-Mobile's MetroPCS and AT&T's Cricket Wireless customers 2.5 gigabytes of data for $20 a month.

"You said you don't want to have to do a lot of math to figure out your best options, and we heard you," said Rob Miller, VP-consumer pricing, Verizon Wireless. "So a plan with small, medium, large and x-large choices makes sense for the way people actually use their wireless service."

As for smartphone subsidizing and discounts, Verizon is not the first to back away from the tactic. T-mobile ended discounts already, and though AT&T still offers them, they are restricted to two-year contracts.

Verizon said existing customers can keep their existing plans, with some restrictions.

Verizon is the nation's largest carrier and fifth-largest advertiser. According to Ad Age's DataCenter, the company spent $2.5 billion on U.S. marketing last year. Its outlay on U.S. measured media alone totaled $1.3 billion in 2014, nearly $500 million of it on broadcast network TV, according to Kantar Media.

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