Verizon Ramps Up Phone Payment Plan Contracts To Three Years
Verizon has made a significant change to its device payment plans, increasing the length of the contract to 36 months. This is up from the 24 or 30-month options the company previously offered, locking customers in for at least an additional half a year.
US wireless have largely abandoned service contracts, making it much easier for customers to switch companies, a process the industry refers to as "churn." Since carriers want to reduce churn as much as possible, it's a common practice to finance phones and tablets over the course of a couple of years. If the customer decides to leave the carrier before the device is paid off, they will have to pay off the phone in one lump sum in order close out their account.
With many high-end phones easily topping $1,000, and some passing $1,500, the device payment plans are an effective way to keep customers locked in, despite no longer having service contracts.
Verizon's New Terms
First noticed by Droid Life, Verizon appears to have removed the 24 and 30-month financing option from all the smartphones the company is currently offering. In their place are two options: pay in full or agree to a 36-month installment plan. Interestingly enough, the company's FAQ page hasn't been fully updated yet, still referencing "24 monthly installments."
As Android Police points out, Verizon's change may have less impact now than it would have a couple of years ago. While Apple is well-known for supporting older phones for years, with software and security updates, Android phone have typically offered far less long-term support. If Verizon had rolled out this option then, many customers would have been making payments on a phone that was no longer supported by the end of their contract.
In the last year or two, however, Google, Samsung, and other manufacturers have started offering longer support guarantees, ensuring their devices will receive security updates for four, five, or more years. This make 36-month installment plans much more viable, as the phone may still be fully supported by the time it's paid off.
With the rising cost of smartphones, it's a safe bet many customers will take advantage of the new installment plans – or might just get locked in to a plan that's another year longer than they've been used to agreeing to with the until-now standard 2-year contract. It would not be a shock to find disappointed consumers appearing on messageboards and social media posts complaining that they didn't realize their new contract was so long, once the next major smartphone launch occurs.