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Summary:

Though Verizon had a big quarter for tablet connections, it actually lost feature phone and basic smartphone subscribers in Q1. Those customers are likely going to T-Mobile and arch-rival AT&T.

Verizon store
photo: Verizon

Verizon Wireless has largely stayed out of the pricing battle waged between AT&T and T-Mobile, but during its Q1 earnings call Thursday, it revealed it’s suffering a casualty or two as well. The country’s dominant carrier lost core phone customers in the first quarter of the year.

Verizon didn’t have a bad quarter by any means. It increased its customer base by 539,000 retail postpaid connections, down from its 720,000 net additions a year ago. But all of those new connections came from customers connecting 4G tablets to Verizon’s network. Verizon signed up 634,000 net new tablet connections, increasing its total base on connected slates by 15 percent in a single quarter, to 4.3 million devices.

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Selling tablets certainly isn’t a bad thing, and Verizon CFO Fran Shammo said it’s still a relatively untapped market for Verizon. But the lopsided growth in slates last quarter meant Verizon lost about 100,000 smartphone, feature phone or modem customers. Shammo acknowledged Verizon is seeing pressure in basic talk and text phones and low-end 3G smartphones, but he pointed out that Verizon is growing healthily in higher-end devices. Verizon added 866,000 new LTE smartphones to its network in Q1, and those pricier devices tend to produce higher-value customers who invest in bigger data plans.

Where are those low-end phone customers going? The obvious answer is T-Mobile, which has been hitting its competitors over the head with its Un-carrier pricing and promotional lures for the last year. But AT&T is also a likely destination.

AT&T has reacted much more directly to the T-Mobile threat, dropping its own pricing and — at least for a time — countering T-Mobile’s offer to pay customers to join its network. AT&T added 1 million net new subscribers in Q1. Smartphones only accounted for 311,000 of those new connections, but that’s still a lot more than Verizon.

Photo by Rob Wilson/Shutterstock

Photo by Rob Wilson/Shutterstock

Verizon seems to be taking this new chink in its armor seriously. In February it tweaked its pricing structure to create cheaper small-bucket data plans targeted at customers with lower-end phones and fewer mobile data needs. It also started offering plan discounts to make its new Edge upgrade plan more attractive, which would help it migrate lower-end phone users to fancier devices. Verizon hasn’t been very hot on the idea of upgrade plans, saying it’s only offering Edge due to customer demand. But upgrades appear to be what consumers want. Both T-Mobile’s Jump and AT&T’s Next are going gangbusters.

As for its financial performance, Verizon saw a huge profit of $5.99 billion, but a lot of that had to do with a one-time gain related to its purchase of Vodafone’s stake in Verizon Wireless in February. Revenues were up 4.8 percent to $30.8 billion, driven not only by wireless revenues but also by Verizon’s fiber broadband business. Verizon netted 98,000 new FiOS broadband customers and 57,000 new video customers, though it lost about 72,000 DSL customers.

Verizon Wireless now has 103 million retail customers, meaning customers who buy their service directly from Verizon via a prepaid or postpaid plan. Verizon didn’t reveal its overall total subscriptions, which would include wholesale connections.

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  1. Price is only part of the reason. This company used to have the best customer service of anyone. It became very noticable what direction they were headed when they replaced their friendly customer service reps with automated recording alerts. It’s also noticable that they have been treating their internal people much worse and scaling back.
    Considering the above, and now enter new price plans by AT&T as well as T-moblie… Why pay more for Verizon when you’re getting less than what the competitors offer, as well as downgraded customer service? Their once loyal customers have been jumping ship.
    It’s not exactly rocket science.

    1. Mike – I agree with you. Calling Verizon and getting their annoying automated recordings is nothing short of customer abuse. Waiting on line to talk to someone for 20 minutes is torturous. On top of all of this, they keep nickle and dimming you to death. I decided not to renew my contract with them. They are ripping off customers.

      Even worse than Verizon is Comcast. My kids have Comcast service and Comcast by far id the worst company when it comes to customer service.

      1. don’t pay your bill they will call you ! then tell them you are no longer their customer !

    2. they did this same thing back around 2006 when I left them…was with US cellular and found a home with sprint..i get to talk with real people with call centers in the USA

  2. i like to see unlimited data in verizon then everyone will come back too verizon think on that note!

    1. I’m with you on this one. We have unlimited data…but we are stuck with old phones. If I upgrade, I lose the unlimited data. This is the #1 reason I am thinking of changing carriers.

      1. You won’t lose it if you pay full price for the phone

        1. Yes, you’re right, it’s called, you can’t have your cake and eat it too.

        2. That is incorrect. They will make you go on a new plan if you try to upgrade to a 4G from 3G, or LTE from 4G. Don’t believe me? Try.

      2. I’ve had unlimited ,but my plan is way too much. The data plan slows down towards the end of the month. So essentially , they are cutting down on our plan just like all the other networks.

        1. They are all a bunch of greedy thugs, that’s why.

      3. By a verizon wireless compatible phone on ebay.

    2. If they don’t go to unlimited data or just charge for what you use in instead of getting more data then need and lose it

    3. They used to have unlimited data plan but not anymore. $50.00 for 5 ga a month, what gives? Verizon is too greedy!! I am not renewing right now, until I find a better plan.

  3. Can’t understand the lemin syndrome with those tablets… watching a movie on a 7″ screen? and good for those people leaving those greedy companies. It was about time, competition brought back some sensible deals for consumers.

  4. I’m not saying they need to offer unlimited data but the amount they do offer on the smartphones vs. the cost is insane. Under my current plan I am paying $120 a month just for the homefussion internet service for 30 GB. For 120 a month that should at least get me double the data somewhere in the area of 60 GB’s. Fix the pricing and the customers will come back. My contract on my smartphone is up now. AT&T is cheaper hands down. I can get 10 gigs a month for the same cost that I am getting 4 GB’s now on my current phone. Let me just add that Verizon just changed their plan to include everything on one plan now… so now my phone will share my homefusion service and actually get me less data for more cost. Its outrageous and highway robbery!

  5. Their pricing is ridiculous! It cost more for a family of 4 to have a cell plan then a monthly car payment! Leaving Verizon asap!

    1. I will be dropping my contract with Verizon as soon as possible.. Overages, and just cost to darn much!!!! Why keep doing that when I can go next door and get unlimited everything for 45 bucks a month and pay as I go!! I would be an idiot to stay with them not happy with them at all!! I know several ppl who are changing as well!!!!

    2. Try giving up the smartphones altogether. Nobody really needs them. I see 20 and 30 somethings working at Taco Bell with these things and I just laugh.

    3. Many are going to Republic Wireless with unlimited talk, text and data for $25 a month. I dropped Verizon for Republic over a year ago and I recommend them from personal experience. With this link they also give you $20 off: http://rwshar.es/Oqvb

  6. my contract with verizon expires next month and i am gone…

    1. me too..too expensive almost same service you got from others

  7. I loved reading all the comments so far. I worked for Big Red for a little more then 7 years. They were a great company to work for up until about year 6. They became so greedy making sales reps push accessories on customers and if they did not they were written up. They had way to many metrics to count and if you preformed bad in one you got written up. The hours sucked the management was OK at best, they didn’t care about customers or their employees ever. I got out in Nov of 2013 best thing I ever did!!!! Crazy thing is I still have my network of customers calling/texting me to help them. They all say the customer service sucks hands down!!!! Sad to see such a great company go down like that and it’s all about making a quick buck or two. Sad Deal

    1. Two Words: Sprint Unlimited for only 85 per month 4glte

      1. Everything filly unlimited $70.00 dollars at T MOBILE.

        1. Everything totally unlimited $60.00 a month at Metro PCS

      2. I have virgin mobile which is sprint 55 a month unlimited everything, some people don’t like sprint but I’ve never had a problem.

      3. Problem is Sprint’s coverage sucks…..Here in the Tampa Bay area you are lucky if you see 3g, much less 4glte. And in buildings, forget about receiving any data..

        1. I agree. I’m with Sprint and I used to drop calls all the time on top of the Howard and Courtney. It seems they can’t get their signal more than 20 feet off the ground. Maybe if they focused on upgrading their towers instead of sponsoring nascar, they would be better

    2. I was let go in March from them. I loved them up until year 6, and that was the same time I transferred to the Rochester call center. The Management is sub par, and the expectations became unreachable for the majority of the reps. I was let go for being abusive to customers, but in the meeting, they agreed what was “abusive” was really a mean way of saying “factual”. I fought tooth and nail for that company, and stood behind their very move, every price change, every sales requirement, but still had to let me go because the surveys weren’t what was expected. Sorry I argued with the customer, but your choice to let them go on a cruise ship and roam roam roam, and then argue with us later that they “didn’t know” they were getting charged(we sent alerts) was not a wise, or fair business decision for us as well as the customer. BYE BYE Big Red!!

    3. I work in cell sales for a rival company and you hit the nail on the head literally. I sometimes work 70 plus hours a week I am constantly criticized for not hitting metrics that do nothing short of robbing from the customer if you don’t hit every impossible goal your in the hot seat on top of that you have to do this while making sure every customer recommends the company not you the company its so exhausting i sometimes lose hope because you never get a pat on the back ever

  8. As a 10 year Verizon customer, I am not leaving because of pricing structure – new or old. I am leaving Verizon because their customer service, both in-store and online, has become nothing more than smartphone and high priced accessory pushers -the quality of service to customers with issues and questions has diminished to the point of non-existence. Once they get that smartphone in your hand, all service disappears. their in-store employees lack knowledge about the products, plans and term agreements. Any problems are those issues are best handled by U-Tube videos and attorneys.

    While I don’t expect the next cellphone corporate entity I choose to be much better, I am certain that I have had my last confusing, illogical, circuitous conversation with a Verizon employee. Adieu Verizon, I will not miss you

  9. My Verizon contract is coming up in May and I have three other lines on the family plan that will done with the contract in Nov 2014. Looking at the pricing that T-Mobile and AT&T are currently offering will help me to quit Verizon if they don’t become more competitive. I figure that I could actually have five lines at AT&T for what I currently pay at Verizon for four lines. Not to mention AT&T gives you way more GB on their data plan for the same price.

  10. We’re looking to leave Verizon too; held hostage by unlimited data plan as long as you don’t upgrade phones (yes, you can pay full price of phone but not for five family members).

    1. You don’t all have to buy I phones, get cheaper phone.

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