Verizon Nixes Phone Subsidies With New Plan, Following Trend

Verizon Communications Inc. will require new customers to pay for their mobile devices up front or in monthly installments, following other wireless carriers who have phased out subsidies in two-year service contracts.

The new policy, effective Aug. 13, will apply to users who sign up for Verizon’s Small, Medium, Large and X-Large data plans, so named depending on the amount of shareable data they offer. Existing customers will be able to keep their plans or sign up for the new ones, the company said Friday in a statement.

Verizon Wireless is the latest carrier to shift away from subsidizing the cost of a phone over a two-year service contract and toward requiring customers to pay the full price for their phones. Verizon expects about 50 percent of new sales to come from its so-called Edge installment plan this year.

“The company has steadily deemphasized subsidized phones in favor of equipment installment plans, so the latter should dominate its postpaid growth,” Jonathan Atkin, an analyst at RBC Capital Markets LLC, said in an e-mail. “I suspect the two-year subsidy model will disappear from corporate stores. It could remain in parts of the business or indirect channels.”