Verizon Wants Customers to Believe That Higher Upgrade Costs Are a Good Thing

By Markets Fool.com

Verizon has perfected the art of making a change to its wireless phone plans that benefits the company while selling it to consumers as a positive for them.

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Like McDonald'smaking the amount of fries included in a Happy Meal smaller and marketing it as making them healthier, the phone carrier has regularly taken away customer benefits while attempting to spin the news as a good thing. A single word, for example, like "simple" can be presented as a positive (who doesn't want "simple" phone plans?) while actually hiding something negative.

Simple can mean easy, but it can also disguise lack of choice. Everyone paying the same price -- say $500 -- for an airline ticket no matter where they are flying would indeed be simple, but it's easy to see that it would be good for some travelers and bad for others.

Verizon has in fact simplified its customers' device upgrade options, but this is one of those cases where the word is being used to cover up the company making its plans worse for customers.

What did Verizon do?
When it launched in Julyof 2013, Verizon Edge offered a fairly straightforward proposition. Customers could pay for a new smartphone in installments, but could upgrade earlier than the normal two years offered by other carriers once they had paid off 50% of the cost of their device.

That seemed like an actual benefit -- somethingSprint , AT&T , and T-Mobile did not offer. It was a good deal for people who liked to have the latest phone, so of course, Verizon slowly made it worse.

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"The amount that Verizon Edge customers had to pay to be eligible for an early upgrade kept creeping up, to 60% in June 2014 and then 75% in October 2014,Ars Technicareported.

Now the company has announced its latest change -- users can only upgrade after they have paid off the entire device. It's hard to see how that's a good thing, but Verizon disagrees.

Verizon pushed Edge as being about earlier upgrades but now offers no incentives to help. Source: Verizon.

What Verizon is saying
it's worth noting that Edge offers cheaper service plans than customers who choose other options from the carrier. It still may be a good deal for Verizon customers, but it has become a less flexible one. The company, however, was all positive in its announcement, which carried the headline Verizon Edge: Making it Easier to Upgrade and Experience Verizon's 4G LTE Network.

It is easier in the sense that picking where to go to dinner is easier if there is only one restaurant nearby. Still, the company attempted to spin the news as good thing while burying the fact that it had changed the deal for the worse.

Upgrading to a new smartphone has never been simpler with changes coming to the Verizon Edge program. Beginning May 31, Verizon Edge customers can upgrade at any time after their prior Edge device is paid in full.

The only thing that has changed is that Edge, which was once an innovative program that facilitated early upgrades, has become nothing more than a financing deal.

Qualified customers still pay nothing toward the Edge device at time of purchase, and the amount financed under Edge is spread across 24 months, interest free. Verizon Edge customers can also receive a monthly line access discount on the MORE Everything plans -- $25 less on the monthly line access for on plans with 6GB and higher, $15 less on plans with 4GB and lower.

That all sounds good, but those were the payment terms before, back when the company offered early upgrades without paying the device off in full.

Customers are not stupid
Verizon has been able to sell customers any deal it wanted to because users were sold that its network was the best. It still is, according to the most recent survey from RootMetrics, but its lead is shrinking, and its lower-cost rivals -- Sprint and T-Mobile -- have improved to levels where the difference may not matter to customers.

According to the survey:

Verizon and AT&T have the current lead, but as Sprint continues its Spark rollout and T-Mobile continues to invest in Wideband LTE, these two networks will mature past a transitional upgrade phase and could quickly close the gap.

As you can see Verizon's lead is not that dramatic. Source: RootMetrics.

T-Mobile, specifically under CEO John Legere, has shown that wireless customers are becoming less tolerant of companies being less than transparent. Verizon is playing games, here, and it's taking away a consumer benefit while telling them it's offering them something better.

It's not, and treating people this way could drive them away from the carrier.

The article Verizon Wants Customers to Believe That Higher Upgrade Costs Are a Good Thing originally appeared on Fool.com.

Daniel Kline owns shares of Apple. He upgrades his phone as often as he can. The Motley Fool recommends Apple and Verizon Communications. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.