Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Verizon Communications Inc. (VZ) Edges in on AT&T Inc. (T) and T MOBILE US INC (TMUS)

Better late than never. Following a leaked internal document earlier this week, Verizon Communications Inc. (NYSE:VZ) Wireless has made its new Edge program official. Edge is Big Red’s new early upgrade program that hopes to compete with T MOBILE US INC (NYSE:TMUS) Jump and AT&T Inc. (NYSE:T) Next.

Verizon Communications Inc. (NYSE:VZ) Edge is fairly straightforward. There are no contracts or fees, and Verizon is offering a payment plan to finance the device. Customers can upgrade after six months so long as they’ve paid for 50% of the retail price. There is no subsidy to speak of, and Edge is geared toward customers who shun service contracts. The new plans launch at the end of August.

Verizon Communications Inc. (NYSE:VZ)Verizon Communications Inc. (NYSE:VZ) doesn’t explicitly mention trading in the used device, but this is a given. If you’ve only paid for half of the device, you can bet Verizon wants it back so it can resell it. Verizon’s plan is more similar to AT&T Inc. (NYSE:T)’s in that there’s no monthly fee just to participate, and that the only requirement to upgrade is that you’ve paid a sizable portion of the device cost.

AT&T Inc. (NYSE:T) spreads out the device’s price over 20 months, while Verizon Communications Inc. (NYSE:VZ) splits it into 24 monthly payments. Neither program requires a down payment, undercutting T MOBILE US INC (NYSE:TMUS) in upfront costs. AT&T effectively requires customers to pay for 60% of the cost (12 months out of 20), while Verizon will accept 50%.

Verizon Communications Inc. (NYSE:VZ) says you can upgrade after six months, but if you do so, you’ll find yourself on the hook to pay the difference. After six months, you’ve only paid 25% of the price, so you’ll need to pay the difference out of pocket if you want to upgrade. On a $600 smartphone, that’ll cost you $150 if you want to upgrade immediately after six months.

The real kicker is the service plan. T MOBILE US INC (NYSE:TMUS) now unbundles the service cost from the device cost. AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) are hoping that customers stay on the pricier service tiers, which are priced to include a subsidy recovery. If customers choose the pricier plans, even on a month-to-month basis, AT&T and Verizon effectively get to charge higher prices without shelling out a subsidy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.