Deployment of VZ Edge expected to have no affect on financial results

Following both the release of its new "Verizon Edge" upgrade plans and Q2 2013 financial results, Verizon CFO Fran Shammo had some interesting statements regarding the new upgrade scheme. When asked if there was any plan to change Verizon's service pricing to reflect the new off-contract and unsubsidized "Edge" upgrades, Shammo clearly stated "We will not touch our service pricing." That's a big disappointing to many of us who have done the rough math on VZ Edge, which shows how much more expensive it will be for customers. T-Mobile, by contrast, reduced the cost of its service plans to reflect the subsidy component being moved to an "Equipment Installment Plan".

Further, Shammo does not expect many customers to move over to the new VZ Edge plan, expecting them to continue along with the two-year contract and subsidized phone model. So few customers are expected to try the new system when it launches August 25th that it will have no impact on Verizon's earnings.

These new types of upgrade plans, which both AT&T and Verizon have now introduced to follow in the footsteps of T-Mobile, essentially charge customers twice for the handset -- once in a built-in subsidy as part of the service, and again explicitly in a payment plan for a device. We wouldn't expect many consumers to bite on this rather expensive scheme either, but considering how financially positive it would be for these carriers to have more customers on-board with the plans, we would think that they would feel more positively towards their prospects.

Source: Reuters