Verizon Will Drop 'New Every Two' Credit for Phones

A "new every two" program that has helped Verizon Wireless customers get a new phone every two years will be dropped on Jan. 16. Verizon had said existing customers could use the "new every two" credit toward an Apple iPhone, but the program will end before Verizon's CDMA iPhone arrives. Other carriers may also take steps to increase revenue.

Welcome, iPhone. Goodbye, "new every two" credit. Those appear to be the transitional greetings at Verizon Wireless, which is getting ready for big sales on Apple iPhones -- in part by quietly canceling a program that offers a credit for a new phone under a two-year plan. Next week, the popular "new every two" deal will end. Under that program, existing customers get a credit of $30 to $100 off a new phone after 20 months of a two-year contract have been completed. The credit could also be transferred to another line of the same account. The discount applies to the discounted retail price of the device, and will end as of Jan. 16. Current "new every two" customers can obtain their credit, but won't be allowed to re-enroll.
Initially Offered
On Tuesday, Verizon confirmed the long-standing rumor that it will offer Apple's iPhone, beginning in February. AT&T has been the exclusive carrier in the U.S. for the popular smartphone.
When the iPhone deal was announced earlier this week, Verizon initially said that customers could use the "new every two" credit toward an iPhone.
Thus, the end of the "new every two" credit comes just before Verizon's expected wave of iPhone sales. The iPhone price for customers with a two-year contract is listed as $199 for the 16GB device, and $299 for the 32GB version, essentially equal to AT&T's offering.
Without the carrier's subsidy, the 16GB iPhone would cost $599. Carriers commonly subsidize the cost of the devices, and Verizon's "new every two" credit was an additional price break.
However, the regular subsidy applies to any customer , new or old, while the "new every two" credit required a customer to have been with Verizon for at least 20 months.
'Design Compromises'
The Verizon iPhone has been adapted for Verizon's CDMA network. Apple said it has been working on an LTE iPhone for Verizon, which would take advantage of the carrier's new 4G network.
But Apple COO Tim Cook said at the Verizon event announcing the iPhone availability, "the first-generation LTE chipsets force some design compromises, some of which we would not make." He added that Verizon customers have been requesting that the carrier offer the phone now, not later.
The Verizon iPhone does have a few differences from AT&T's. While the Verizon iPhone won't let customers talk on the phone and browse the web at the same time, as the AT&T phone does, it will allow owners to use the device as a wireless hot spot to offer data connections for as many as five other devices. This latter capability is something the AT&T phone doesn't yet have.
Some industry observers are suggesting that Verizon's new stinginess with credits will be reflected at other carriers. The thinking is that all the major carriers are going to be looking for more revenue to support the rollout of their new 4G networks and the costs of handing the heavier data traffic from more smartphone users.