Verizon Wireless reacts to confusion caused by terms of Verizon Plan options

Reaction and confusion to recent rate plan changes resulted in Verizon Wireless coming out this week to reiterate its support for customers on legacy contract plans.

The carrier posted a list of answers to questions it said it has received from current customers on two-year contracts that were tied to receiving a subsidized price on their handsets. The answers basically state that those customers on contract plans can continue to take advantage of subsidized device pricing tied to the renewal of those two-year contracts.

More specifically, Verizon Wireless said current customers can move to the new rate plans, though they will be charged $40 per month per line of service accessing a shared data bucket instead of the $20 that is charged as part of the new offering. Should the legacy customer reach their upgrade eligibility date and not acquire a new device, they will see their per-line access charge drop to the $20 mark.

Other tidbits include explanation that customers who do move to the new Verizon Plan will not be able to switch back to their legacy plan; current customers on a contract plan can still add a line to their existing plan; current contract customers can still purchase a new device on a monthly device installment plan; and current Edge device installment plan customers can switch to the new plans and continue paying for their device under terms of the original agreement.

“Our sole intention of this new pricing is to make things more simple for our customers – so you know exactly what you’re paying for and how you’re saving.” Verizon Wireless explained.

Verizon Wireless earlier this month launched the new rate plans that included a bucket of data access labeled “small” for 1 gigabyte of data, “medium” for 3 GB of data, “large” for 6 GB of data and “x-large” for 12 GB of data. The data buckets include unlimited voice calling and text messaging, and are priced at $30, $45, $60 and $80 per month, respectively.

Connected with the new rate plans were adjustments to per-line access charges, with smartphones now charged $20 per month; tablets and mobile hot spots priced at $10 per month; and “connected devices” like smartwatches priced at $5 per month regardless of the size of the bucket selected. Compared with legacy shared data bucket plans, the new pricing is $5 more expensive per month for smartphones on data buckets of at least 6 GB, though $5 less expensive on data buckets of 4 GB or less; $10 less for mobile hot spots; and tablets and connected devices stay the same.

A bigger headline grabber was that the new rate plans are only available through Verizon Wireless’ device-financing program. The program tacks on a monthly charge for the device on top of the rate-plan charge, or customers can pay full price for their device upfront.

Analysts had said they expect device-financing activity to provide at least a $2 billion boost to Verizon’s earnings before interest, taxes, depreciation and amortization in 2016, though some also note the carrier will still be on the hook for more than $400 million in device subsidies that will dilute the overall EBITDA benefit.

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