Verizon will drop phone contracts, end discounted phones | Hacker News Reader

Verizon will drop phone contracts, end discounted phones

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30 pointsjrs23544 comments

This should ostensibly be a good thing. I pay $300-500 upfront, and then my bill goes down from $90/mth to something more reasonable like $60/70.

In practice, however, what I imagine will happen will be that they'll tack on all sorts of fine-print fees and other obnoxious gotchas such that the end bill will probably be about the same...plus the fact that I just paid $500 for the damn phone.

Look to the airline industries. Did they stop their absurd baggage checking fees when the price of gas went down?

> Look to the airline industries. Did they stop their absurd baggage checking fees when the price of gas went down?

Well, baggage isn't costless to the airlines. In theory thing should be more efficient if the consumer saw approximately the correct price. I just wish Kayak would start showing prices assuming 1 checked back by default, and give you the option to specify how many you expect to bring. That would remove a lot of the incentive for those gotcha charges.

How often do people travel with checked bags? Even for a two-week trip, I typically bring an overhead carry-on and a backpack.

Lots of infrequent traveler friends of mine will bring a full-size suitcase for trips of a few days - a week. I personally love running off the plane and into wherever I've landed to explore, but not everyone travels so light.

Judging by the line at the carousel, I'd wager there's at least a bag for each person on the plane on average.

All you have to do is bring your bag to the gate and they always check it for free. It wastes more time for everyone but they still get to charge the poor honest people at the ticket counter

This works if you have an additional carry-on-sized bag. I probably wouldn't try it with a huge suitcase, surfboard, or anything else "special" or oversized.

It should actually go further down than that.

Verizon still plays games with phones purchased through them, however. Their new plan, "Edge", is only discounted to a reasonable rate if you also purchase a phone from them through monthly installments. The cheapest phone they offer that qualifies for this discount ($15/m) is $200.

So, no bringing your own device, unless you like paying more for the same service.

Except you can't bring your own non-verizon device, even if it is LTE, they won't allow it on their network.

I thought they couldn't discriminate on devices. When government auctioned off the old TV frequencies, thats was part of the agreement. LTE is using these bands.

They can't stop you from using a device that technically works on their network.

Say for instance you bring an unlocked AT&T iPhone 6 to Verizon. If you have an existing sim card (all LTE devices have them even on Verizon), you can simply swap your sim card into the device and it will activate automatically and work just fine. However, if you take that device into the store and need to get a sim card, they will refuse to give you one as they only activate devices that are on their whitelist.

A way around it would be to just borrow someone else's Verizon LTE capable smartphone to activate temporarily to get a sim card and then just swap it into your device you want to use.

I think this should put price pressure on the phone manufacturers. With the price tag of the phone out in the open, customers will now realize the actual cost of the phones and start selecting lower price models. Most people do not realize what the retail price of a phone is since it is so heavily subsidized by the carriers.

It also means people won't wastefully buy new phones every two years. Under the contract system, customers were given the chance to upgrade their phones every two years for free or whatever small additional fee particular phone models would cost (e.g. iPhone would be $100, but a cheap Nokia would be free). It was a waste not to upgrade, so oftentimes perfectly good phones would get replaced just because you had to upgrade. It also meant renewing the contract, allowing carriers to force customers into new terms every two years.

What an abusive system. For all of T-Mobile's faults, I'm glad I switched to their no contract plan years ago.

The trouble is, most flagship phones are made these days under the assumption of a two year use. I bought a HTC One M7 two years back because it was the best Android phone available then, but it's now barely usable: I have to charge it twice a day, the camera has this ridiculous purple tint, the latest Android is bog slow on it, and its out of warranty.

I've been using the same PC for five years with no problems, so I bought my phone at full price from HTC thinking I'd use it for a similar lifetime, but it's really a PITA to use now.

I think the manufacturers intend the phones to be obsolete after two years, but there are perfectly good phones that will run for years. I've had a Nexus 4 since early 2013 and it came out generally in 2012. Still runs just as well as the first day I got it, Lollipop and all. The only problems I've had have been with the software, but that can happen on any hardware. I thought about buying an iPhone last year and will think about it this year again and likely keep it at least another year or two unless I give it to someone else who will use it also for that period of time. Five years isn't bad for a phone.

That being said, I would not buy a Google hardware product since they will not fix software bugs that affects their two year old hardware even if that bug is that phone calls don't work. I can see that from other manufacturers, but since Google owns Android, that's inexcusable. The hardware itself is tough as nails though.

For sure, but it varies. My experience is from the iPhone camp, so I'll speak to that. Some iPhones certainly became obsolete after two years. But some of them were troopers. The 3GS, for example, had a very long life, as did the 4. My 5 is starting to get wonky, but it's good enough that I haven't upgraded yet.

My boss has been using the same Android phone for a few years now, so I know a similar pattern exists in the Android market.

The point is that you can choose when to upgrade, rather than being more or less forced to upgrade every two years. This is especially helpful to those with tight budgets, which I think composes the majority of people.

That's been my experience with Android phones. When I bought an S4 when it first came out it was barely usable with all the bloatware from AT&T and Samsung. The battery should run down within 8 hours. I flashed the Google edition and it helped but I couldn't stand it. Same stuff happened after 12 months, decreased battery life, slow and sluggish.

Switched backed to an iPhone 6 when it came out and haven't looked back. It's been great and the past 8 months nothing had shown down and my battery still lasts a full day of browsing and Spotify.

iOS8 battery life on pre-2014 hardware has gotten worse with each update. Hopefully iOS9 will remedy the situation for pre-2015 hardware.

I have heard quite a bit about that and I've no doubt it's the case. There's just no priority for Apple to support their older hardware, although I think it got somewhat better between 8.0 and 8.2.

If you're inclined to do it yourself then I recommend trying to replace the battery. You can get a high quality one from ifixit for around $20-25 and it does make a nice difference.

I've an iPhone 5 purchased in January 2013 with a new battery from iFixit from this past February and there are just certain apps that absolutely kill battery life regardless of which release of iOS 8 I use.

Though Apple has made their new software versions for their new hardware I think overall performance since early iOS 6 releases has been consistent on iPhone 5+ with the various exceptions for bugs. The problem I see is with devs for large deployments (Google, MLB, Yahoo, etc.) ONLY take into consideration the new hardware. My MLB.tv subscription which includes At Bat app has become such a drain on my battery since the start of the 2015 season. Even streaming radio broadcasts will use 50% of my battery after 5 or 6 innings with the screen locked as in NOT DISPLAYING ANYTHING! 2 years ago a Red Sox/Yankees game (4+ hours) would use maybe 20%.

Weekdays, I get a couple hundred emails plus 10-30 calendar notifications per day from personal and work Google managed domains. Easily that takes up 20-30% over an 8 hour workday with all the fetch. Previous employer with Exchange and push using Active Sync was maybe 10% usage per 8 hours. Weekends of course I rarely see the drain at all in regards to mail.

Point is, I know I'm at EOL with iPhone 5 but I at this point can't really blame Apple as stock (and on weekends unless streaming a ball game) battery life is as consistent as the day the phone was purchased.

This is a very interesting dynamic because it is absolutely true that the phones are designed to last about 2 years. But the carriers also depend on this because in order for them to introduce new features and functions or to get new spectrum opened up for capacity, the count on the entire user base of phone essentially turning over every few years. If that pace slows down, it will be more difficult and take longer for them to turn up new spectrum.

nope, most of the price is the patent costs for the telephony transport used..for example the LTE chip is more expensive than the 3g due to patent costs alone..part of that cost is also the fact that firms like Qualcom can only produce so many chips

In Europe less and less people buy subsidized phones.They want their subscription as cheap as possible and without any string attached. It might not be a good deal if you want an Iphone though,so they should keep that option for Apple customers. But when you can get an android phone for 50€ there is very little reason get a 2/3 years contract.

However :

> Under the new plans, customers will pay $50 for 1 gigabyte (a price increase for both groups) and $65 for 3 gigabytes (a price cut). The 2 gigabyte plan is being discontinued, so customers will have to choose more or less.

It is fn. expensive when compared to EU prices. Why is that?

"It is fn. expensive when compared to EU prices. Why is that?"

In the US, there are only 4 major cell phone carriers and their plans are so similar in price, it might as well be a monopoly.

Does Europe have 4 major competitors in each country? I seriously doubt it. It's probably the opposite. They have three or less true operators and they each have more spectrum at a lower cost.

The cheapest option would be a single carrier regulated by government. But they might not upgrade as fast. So we might have super cheap 2g instead of expensive LTE A.

I forgot to mention the two year contracts which rendered competition essentially meaningless until about two years ago or so.

We've got 3 major ones in the Netherlands. There's over a dozen carriers but they all use one of these networks.

Not super familiar with the rest of Europe but the larger countries have 4 operators as far as I know, like the UK, Germany, Spain, France... but there's also plenty of smaller countries that have four, like say Greece. Sweden afaik has even 5, and the Ukraine iirc has 6.

Anyway it probably has to do with density. I was flabbergasted when I studied in Canada and ended up seeing phone bills that were like 3x my own back home where we have only 3 operators. But it's pretty easy to cover the size of the Netherlands cheaply, as for Canada or say the US... different story. (although in Canada regulation also played a big role, it wasn't a very competitive market)

> It is fn. expensive when compared to EU prices. Why is that?

US carriers have to cover a land area 1/3rd greater than the total land area of Europe[0] and they have just barely half the population to spread the costs over[1]. Also there are no inter-state roaming fees in the US, from what I understand most European carriers have roaming fees outside of your home country. That doesn't explain the entire price gap, but even in a perfect world US phone plans would still be more expensive than European plans just on that basis alone.

Additionally, Verizon's main selling point is they have the largest coverage area so their plans are always the most expensive. T-Mobile, Sprint and many MVNOs offer much cheaper service (with less coverage). For example you can get 100 minutes/unlimited texts/5 GB of 4G LTE data for $30/month on T-Mobile prepaid, 300 minutes/unlimited texts/2.5 GB data for $35/month on Virgin Mobile (uses the Sprint network), or unlimited minutes/texts/2.5 GB 4G LTE data (throttled to 8 Mbps) for $35/month (with autopay discount) on Cricket (uses the AT&T network).

[0]: http://www.wolframalpha.com/input/?i=%28land+area+of+usa+-+l... (excluding Alaska since it's huge and almost nobody lives there)

[1]: http://www.wolframalpha.com/input/?i=population+of+usa+%2F+p...

"It is fn. expensive when compared to EU prices. Why is that?"

EU prices vary a lot and some parts of Europe are not much cheaper than the US.

The Digital Fuel Monitor has a nice comparison: http://dfmonitor.eu/downloads/DFMonitor_1H-2015_Europe_mobil...

It doesn't sound simpler or cheaper to me. If you include the price of the phone, it can easily end up being more expensive. And they still have a different cost for people bringing their own phone...

I'll be curious to see if this has any impact on phone pricing. Without the subsidy, I doubt as many people will upgrade as often, which will slow phone sales.

It shouldn't, since they're introducing installment plans instead. So your monthly bill won't really go up.

It will just become installment payments.

The contracts were a scam. Seems great at first, but eventually you realize you already paid for your phone and are just getting fleeced. So you try to leave one month before the contract ends for a service that is half the cost, and they nail you for $200. Only your credit is already useless, so they don't get the $200 and instead just get a lot of angry former customers.

Ugh, I hate this article because it just buys into the industry PR terminology. Buying a "subsidized" phone doesn't mean the big phone company is cutting you a deal, being nice to you, and putting money in your pocket. No, it's providing financing for a phone purchase at an effective APR of around 100%. It's ridiculously lucrative for them.

Exactly it's just a loan, buying a phone on credit and paying it off monthly. It's like saying buying a home with a mortgage is buying a subsidised home, just ridiculous.

While there is much celebration of the end of contracts, a contract has benefits from each side. While you may not be happy with the amount you have to pay, it can't change for the duration.

Now it appears that everyone will be month to month by default which means the bill can (and will!) change at any time.

A decent carrier like T-Mobile who has had no contracts now for years will not do this, except to offer lower priced plans, which they have.

I like it, it means the purchase of your phone and your contract are separate. This makes total sense from a consumer perspective, the fact they've been on the same contract for so long is absurd.

Imagine buying a laptop with an internet subscription for two years. If you happen to go on vacation or move countries, or sell your laptop to buy a new one... well tough luck you're still paying for that, usually non-transferable, contract for service you're no longer using. You can apply this to anything, like buying a television with a two year cable contract, it's just silly.

That model worked years ago. Today we're seeing customers on the move much more, and I'm personally seeing more turnover of equipment, too.

It doesn't really have anything to do with 'discounts'. Vendors weren't running a charity and they're not ending any discount, they're simply structuring everything a little differently, I think that makes sense.

Part of this trend is probably both consumer-driven (I wouldn't be surprise if this was a response to a growing number of consumers requesting and complaining about ending long-term contracts for sensible reasons like switching phones, country or even simply carrier), as well as driven by changes in law.

For example here in the Netherlands, a discounted phone is now seen as a loan. And loans have certain legal requirements. For example when you advertise or offer a loan, you must very visible (like a cancer warning on cigs) say 'Attention! Borrowing money costs money', which links you to a government initiative to inform about the risks of loans. Another requirement is that the vendor is transparent and clear about the costs of the loan, and it's in a standardised format that is very hard to structure in a way that it looks really good but really screws with you (like US payday loans). The loan must also be checked against the de facto debt-service coverage ratio of the individual if it's high enough, and then gets registered. All these things happened recently in response to the learnings from the consequences of predatory loans in the financial crisis.

And it is a loan, if you get a free phone but pay a higher monthly fee, it's not much different from buying a house on a mortgage and paying a monthly fee, only it's smaller in scale and timeframe. Because of this, the phone and the data plan are advertised separately, even if they're sold as a bundle. You can still get a phone with $0 upfront, but it's advertised as a loan transparently and separately from the dataplan. I wouldn't be surprised if stuff like this becomes a best practice standard worldwide pretty soon, and so perhaps carriers are making changes ahead of time.

Americans have very different attitudes to loans, compared to Europeans: you do not borrow - you are missing out what life offers to you.

I don't think its Americans that would rather get loans on things. For cellphones it's the only option available with the big 2 carriers (the others used to do it too).

Last time I was in the store the reps had to explain about the installment plans over and over. Most people were outraged and didn't believe the employee telling them their phones had been subsidized. They couldn't fathom the actual cost was $649+. We also don't have much prepaid plans unlike what people have told me they have in other countless.

Given the very high levels of household debt in most of developed Europe, I have to disagree with your premise.

See: Netherlands, Denmark, Sweden, Ireland, Portugal, Finland, UK, Switzerland, Norway, Spain -- all of which have either high or very high household debt to income ratios due to "loans."

I am talking about consumer debt.

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