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Verizon loses phone customers as price competition heats up

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Verizon Wireless (s vz) has largely stayed out of the pricing battle waged between AT&T(s t) and T-Mobile(s tmus), 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.

89 Responses to “Verizon loses phone customers as price competition heats up”

  1. I used to work for Verizon and they were great at the time. The customer service is so bad now and it all started with the I phone. They think they can not loose customers because they now carry the i phone. I could not care less about the i phone but for some reason it gave them power. I stay because of the network ONLY. Customer service is so bad now.. You would think the company would hear everyone saying this.

    • humannzee

      Everyone else is close — very close. In many areas there’s no real difference at all. Why get ripped for virtually the same caliber service?

  2. Shari Weston

    SO glad there’s a place I can post about Verizon so I can inform whoever reads this about what they did to my mother. She’s a very elderly person who doesn’t always understand the “tech” talk, so therefore, she has a younger office helper who is very bright and knowledgeable, especially when it comes to smartphones.
    One day, they had a Verizon rep. on the line, on speakerphone on her landline so they could both hear the conversation. The rep said that my mom could add unlimited texting for my phone which is also on her plan along with her office worker’s, for only an additional 10 dollars a month. This was a few years ago, but they BOTH heard the rep say this VERY clearly. Since at that point I was under the impression I had unlimited texting, I started using my texting quite frequently. The following month, her bill was $300 more because of my texts. When her office worker called to challenge the charge, they said they knew nothing about unlimited texting for only 10 dollars more but finally agreed to cut the charge in half to $150.00. This was in addition to her regular bill. The rep they were talking to that told them it would be only 10 dollars more flat out LIED and there was NO proof since they did this over the phone. Advice to be taken here? Don’t EVER make changes to your cell plan by talking to a rep. over the phone. Make your changes online or in person so that you have a printed out copy for proof because they could possibly lie to you and deny the whole thing. They did to my mother. When the 2 year contract was up, she cancelled and we went with T-Mobile. I sold my used Verizon Motorola Droid for $150.00 and never looked back.

  3. Verizon’s usual M.O when pulled into a price war is to announce new plans in which they give you less and charge you more, and then try to get you to believe it’s a better deal. They always seem to get away with it, so why would they change anything?

  4. Randall Jake

    Switched to T Mobile from Verizon. There is is no difference in the quality of service. So it is all about the money. With Verizon I was paying $180.00 for 3 lines with continually diminishing plans. Then Verizon began to threaten me. They were going to discontinue my 20% discount. T Mobile bought out my Verizon contract. I save $80.00 a month with T Mobile. That is about $1000.00 a year. $10,000 in ten years. Well you get the picture. It is all about the money when all of the other things are equal.

  5. Three Wolves

    Good ridden Verizon, you made your own bed, now you can sleep in that bed. Your pricing sucks, your customer service sucks, your phone upgrade sucks, and your egotistical methods towards consumers suck, Though your coverage is probably the best in the US, I don’t mind dropped calls and delayed texts a few times to avoid all the other crap you provide. We shouldn’t be talking, texting while driving anyway. Cudo’s to AT&T and T-Mobile on their forward thinking.

  6. sdffa11

    verizon was a good company to work with 7-8 years ago but somewhere along the way, all they started caring about was dollar signs. their “my way or the highway” approach about the removal of unlimited data, constant price increases and rates that are much higher than competitors and for what…non existent customer service and the less flexible service that other carriers provides. verizon is the new comcast and time warner cable. i would rather live like a caveman with no cell phone than to ever do business with them again.

  7. Mark Fuller

    I’m just fed up with the whole idea that all carriers are now almost forcing ALL customers to go to data packages and pay for data packages even if the customer does not want internet access over their phone!!

  8. Abdulai Bah

    Recently decided to give Verizon a try form the first time mainly to take advantage of my company’s 25% discount. But my bills kept telling me a whole different story. Its as if I had no discount. Less than two months later I took advantage of Tmobile’s ETF payment and I left Verizon as fast as I could. Tmobile just approved my $300 Verizon ETF and I am waiting for my mastercard to pay them off. You never say never but I doubt I will be returning to Verizon any time soon. Its a great company however greed is tearing it apart.

  9. T-Mobile is the best, I was paying $78 for unlimited everything but just got the Galaxy S5 and now I’m paying a little more due to mobile hot spot of 5 gb.

  10. BigApple

    Sprint is still the best cell and data value available. Read all the other carrier’s offers, including the fine print on new phone costs and possible overage charges. Do the math. Sprint is the best value for your dollar in unlimited data and cell service.

  11. bicyclebill2000

    ATT’s infamous “$160.00 for four smartphones” ad on TV leaves out a lot of details…. such as you have to be on their “Next” plan with each of the four phones.  This means that you have to be buying four brand new phones and are paying a monthly installment on the FULL RETAIL COST of each phone — which (depending on the phone) could be anywhere from $20 to $30 per month EACH.  Multiply that by four; then add that to the $160 you’re paying for that voice/data plan.  Guess what?  You’re back up to $260 again.

  12. I worked for VZW for about 4 years and resigned last month due to the direction Mike is mentioning. I was hired as a Customer Service Rep and did very well. From day 1, however, there is a “take care of the business” component that seemed to becoming ever increasing. VZW justifies it by “we’re meeting the customer’s needs” but telling people they prequalify for a “Gold Bundle” of accessories when it’s the normal bundle price is salesmanship geared toward taking care of Verizon. I actually had an Associate Director “position” how the customers really needed the crap but just didn’t know it :/ Come on……business is business. It’s obvious VZW is taking a hit because admin keeps talking about how they have reached the “critical mass” of allowable disconnects. Now if someone wants to disconnect a line……ANY line, even an outdated, no longer needed, person is dead line……a rep is expected to hold up a sign and cannot let the customer off the line until a member of management chimes in and advises on the call so as to potentially not lose the line. You end up talking someone into suspending without cost for 3 months which certainly doesn’t benefit VZW and just pisses the customer off by being badgered. I’m supposed to be under some agreement not to disclose any company info since I worked there. Oh well.

  13. Hannah Thomas

    I left. I’d been with them since the dinosaurs, and I was one of the basic phone users.

    We have one smartphone, and 3 dumbphones. $150.00/mo.

    When I called because of the price wars? I told them I could save $30-50 a month with a competitor, and that was with 4 smartphones..and data!

    Their response? For $30 more a month you do the same here.

    It never dawned on them they were going in the wrong direction.

  14. 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).

  15. Franklin

    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.

  16. bkate70

    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

  17. 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

    • Brandon T.

      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!!

    • ixioneste

      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

    • Jennifer

      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!!!!

    • RickRoma

      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.

  18. 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!

  19. simpleman

    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.

  20. 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.

    • Shawn Delavar

      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.

    • James Gordon

      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