Verizon Drops The Axe! Will Disconnect Unlimited Data Users Using Extraordinary Amounts Of Data!

[Siouxsie]

A Best Buy phone person told me "on the sly" yesterday that the 2 year contract safety net is slated for extinction soon. As early as December no later than mid 2017. No more locking in with contract. Verizon will only have this phone payment plan, Period.
How serious should I take this "tip"?

Sent from somewhere down the rabbit hole.

 

[Sajo]

A Best Buy phone person told me "on the sly" yesterday that the 2 year contract safety net is slated for extinction soon. As early as December no later than mid 2017. No more locking in with contract. Verizon will only have this phone payment plan, Period.
How serious should I take this "tip"?

Sent from somewhere down the rabbit hole.

Just my 2 cents, but I take any rumor like this from a 3rd party source with many grains of salt...if it wasn't from a senior executive within the company actually making the policies then maybe the whole salt shaker.

 

[FoxKat]

I agree with @sajoakaz in that any information passed to a subscriber or other person should be taken with a grain of salt...super-fine salt. Still, some of these rumors do turn out to be true so don't stop releasing this information. If nothing else, it excites the discussion and debate and is good food for thought.

I do believe there is a plan to do away with UDP ultimately, however when is the big question.

Now, if your "source" is suggesting that Verizon will do away with 2-year contracts that are within the 2-year contract period, that won't happen because it would be a breech of contract that's legally enforceable. If the source is suggesting that Verizon is going to do away with 2-year contract protection going forward, in other words any new contracts for service or renewals of existing contracts will only be 1-year, I could see that happening as an extreme remote possibility, however it would go against the grain of the industry, and also be counter-intuitive.

Carriers want LONG-TERM customers. The longer you stay a customer the more profitable you are. Think of it this way, there is a "cost of acquisition" for every new customer which includes all the marketing and advertising that they do to get that customer, along with the fact that there is an immediate expense of the direct sales process and processing of payment. There are other underlying expenses as well. Once all these costs are incurred, the carrier is essentially starting in the red with the customer.

Then they extend credit to the customer by providing the actual cellular services and then waiting for the payment of the first bill which won't go out for 30 days. Then there is the grace period of payment due, along with continued service - a further extension of credit, and then possibly another month or more of service, penalties for late or non-payment, and other expenses, collection costs, texts, emails, and on and on. Finally service is disconnected and the company loses all those expenses. Unless they get payment, this whole process is a loss. So, if they do get payment, the bulk goes towards recovery of the up-front expenses. Let's add to the mix a discounted phone and you have still more remaining expenses to recover.

So in order to be profitable, they must first collect revenue in the form of payment of the outstanding cellular bills. So with each month, there is additional extension of credit in the form of new monthly cellular service, and then (hopefully), recover in a monthly payment. Each month, more of the expenses are recovered, but more are incurred as well. Eventually the curves of expenses over income takes a flip-flop and it becomes a profitable transaction, but it could be even more months before that profit is really what would be considered a reasonable profit. Once all the initial expenses are recovered, then it's just the ongoing expenses that are then covered with each billing period.

Then there is the cost of attrition, or the cost of the termination of existing customers and contracts. This is something EVERY merchant is trying to avoid, since it's an exiting smack in the most painful part of the body, the pocketbook. Customer loyalty is key for longevity and there is an entire department devoted to this. Could you imagine them losing customers to T-Mobile after 1-year with a great percentage of their customers? This would spell disaster for them in so many ways, including the stock prices which would tank.

So if Verizon can keep subscribers on the hook for more months, the added profits of further future monthly billing payments brings the overall average profitability up and this is the entire reason for a 2-year contract. this is also the reason for the Early Termination Fee (ETF). It is intended to at least partially account for those initial and subsequent expenses.

In the end it would be very hard to do away with 2-year contract offerings, but one thing that could make a case for it is to stop offering discounted phones or any extension of credit to purchase them. This would be suicide IMHO, since they would then be completely out of the competition with the smaller carriers, T-Mobile, Sprint and others like them, who are favorites among people who are on a tighter budget. I really don't think this will happen even with that as the impetus to stop offering 2-year contracts.

 

[liftedplane]

I agree with @sajoakaz in that any information passed to a subscriber or other person should be taken with a grain of salt...super-fine salt. Still, some of these rumors do turn out to be true so don't stop releasing this information. If nothing else, it excites the discussion and debate and is good food for thought.

I do believe there is a plan to do away with UDP ultimately, however when is the big question.

Now, if your "source" is suggesting that Verizon will do away with 2-year contracts that are within the 2-year contract period, that won't happen because it would be a breech of contract that's legally enforceable. If the source is suggesting that Verizon is going to do away with 2-year contract protection going forward, in other words any new contracts for service or renewals of existing contracts will only be 1-year, I could see that happening as an extreme remote possibility, however it would go against the grain of the industry, and also be counter-intuitive.

Carriers want LONG-TERM customers. The longer you stay a customer the more profitable you are. Think of it this way, there is a "cost of acquisition" for every new customer which includes all the marketing and advertising that they do to get that customer, along with the fact that there is an immediate expense of the direct sales process and processing of payment. There are other underlying expenses as well. Once all these costs are incurred, the carrier is essentially starting in the red with the customer.

Then they extend credit to the customer by providing the actual cellular services and then waiting for the payment of the first bill which won't go out for 30 days. Then there is the grace period of payment due, along with continued service - a further extension of credit, and then possibly another month or more of service, penalties for late or non-payment, and other expenses, collection costs, texts, emails, and on and on. Finally service is disconnected and the company loses all those expenses. Unless they get payment, this whole process is a loss. So, if they do get payment, the bulk goes towards recovery of the up-front expenses. Let's add to the mix a discounted phone and you have still more remaining expenses to recover.

So in order to be profitable, they must first collect revenue in the form of payment of the outstanding cellular bills. So with each month, there is additional extension of credit in the form of new monthly cellular service, and then (hopefully), recover in a monthly payment. Each month, more of the expenses are recovered, but more are incurred as well. Eventually the curves of expenses over income takes a flip-flop and it becomes a profitable transaction, but it could be even more months before that profit is really what would be considered a reasonable profit. Once all the initial expenses are recovered, then it's just the ongoing expenses that are then covered with each billing period.

Then there is the cost of attrition, or the cost of the termination of existing customers and contracts. This is something EVERY merchant is trying to avoid, since it's an exiting smack in the most painful part of the body, the pocketbook. Customer loyalty is key for longevity and there is an entire department devoted to this. Could you imagine them losing customers to T-Mobile after 1-year with a great percentage of their customers? This would spell disaster for them in so many ways, including the stock prices which would tank.

So if Verizon can keep subscribers on the hook for more months, the added profits of further future monthly billing payments brings the overall average profitability up and this is the entire reason for a 2-year contract. this is also the reason for the Early Termination Fee (ETF). It is intended to at least partially account for those initial and subsequent expenses.

In the end it would be very hard to do away with 2-year contract offerings, but one thing that could make a case for it is to stop offering discounted phones or any extension of credit to purchase them. This would be suicide IMHO, since they would then be completely out of the competition with the smaller carriers, T-Mobile, Sprint and others like them, who are favorites among people who are on a tighter budget. I really don't think this will happen even with that as the impetus to stop offering 2-year contracts.

I'd prefer to see the end of 2 year contracts myself, or a system more akin to Europe.

I feel like I need to write 10 more paragraphs to give a proper response, except I'm not going to.

Sent from my XT1575 using Tapatalk

 

[FoxKat]

I'd prefer to see the end of 2 year contracts myself, or a system more akin to Europe.

I feel like I need to write 10 more paragraphs to give a proper response, except I'm not going to.

Sent from my XT1575 using Tapatalk

Mine was only 9 (one was only one sentence, so - 8 maybe????)

 

[Siouxsie]

The employee was definitely not indicating doing away with 2yr that are within that contractual time period. She showed me the 3 payment options for new phones-purchase on a monthly payment plan eg: $21/month for 20+ months; subsidized price under 2 year contract; full price with no contract. She said the second option is the one ending.
Will go back over weekend and pick a different employee's brain and see what is said.
I was starting to feel a wee bit of anxiety since I own a phone I love with old UDP.
Thanks guys

Sent from somewhere down the rabbit hole.

 

[FoxKat]

The employee was definitely not indicating doing away with 2yr that are within that contractual time period. She showed me the 3 payment options for new phones-purchase on a monthly payment plan eg: $21/month for 20+ months; subsidized price under 2 year contract; full price with no contract. She said the second option is the one ending.
Will go back over weekend and pick a different employee's brain and see what is said.
I was starting to feel a wee bit of anxiety since I own a phone I love with old UDP.
Thanks guys

Sent from somewhere down the rabbit hole.

Well as I said, it is possible but I'm still calling this a very unlikely rumor. Still, I'd be curious if any other Verizon reps corroborate this.

Sent from my XT1585 using Tapatalk

 

[jackiescivic]

Well as I said, it is possible but I'm still calling this a very unlikely rumor. Still, I'd be curious if any other Verizon reps corroborate this.

Sent from my XT1585 using Tapatalk

I haven't heard anything about it, but I wouldn't be surprised if it did

Sent from my SM-G930V using Tapatalk

 

[cr6]

Has anyone heard of a friend/neighbor/coworker actually receiving a letter in regards to their UD usage being too high?
I mean personally, not "I heard that a friends cousins sisters Facebook friend from the hair salon she frequents every two months" type scenario.

S5 tap'n

 

[Mustang02]

Only what I saw on droid life. Nobody yet. But they wouldn't until end of August.

 

[Wadman]

Soooo???? Has anyone actually received a letter yet??? We use quite a bit of data and I was worried that they would drop the hammer on us, but we have yet to receive any notification. Just curious to see if anyone has actually been informed that they would have to switch yet. Hopefully this was a scare tactic and nothing will come of it.

 

[xeene]

I haven't went over 100gb in a while. I mean I could in a day but don't really have a reason to.

 

[cr6]

I wondered the same thing @Wadman . It's the end of the month and we haven't heard anything either. My SO even purchased a new Note7 so they've seen our usage and didn't say anything, or try to move us off our UDP's.
I agree, this was just another "scare tactic" that got people all worked up for nothing.
Oh well, it is what it is. Safe for another year, or until they release another story in 6 months and the internet will blow up again with people arguing as to the proper way to use your unlimited data.

S5 tap'n

 

[Wadman]

I haven't went over 100gb in a while. I mean I could in a day but don't really have a reason to.

We have no other form of internet offered where we live so we use quite a bit.

I wondered the same thing @Wadman . It's the end of the month and we haven't heard anything either. My SO even purchased a new Note7 so they've seen our usage and didn't say anything, or try to move us off our UDP's.
I agree, this was just another "scare tactic" that got people all worked up for nothing.
Oh well, it is what it is. Safe for another year, or until they release another story in 6 months and the internet will blow up again with people arguing as to the proper way to use your unlimited data.

S5 tap'n

That's what I figured as well. I try not to get into those type of debates but have been lured into some heated arguments about how to use data. I don't complain when things like this happen. I figure, one day, we will lose unlimited and when that day comes I will have to figure it out. Until then I will continue to use, and appreciate the unlimited data that I have.

 

[Wadman]

We are in the same boat. Hughes net is the only internet offered in our are so we use our data pretty heavily.