Blog Post

Verizon loses phone customers as price competition heats up

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.

ipad air wide

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. Michael

    Yes, Verizon sucks. Unfortunately, there are a whole lot of places where switching to any other carrier means you will never have service. Paying another carrier for a 4G data plan if that carrier doesn’t actually have 4G coverage where you live is not saving money,it’s throwing money away.

  2. They are just too expensive and they aren’t as good to their customers as they were about 8 years ago when we signed up with them. Our contract is fixing to be up and I’m totally thinking of changing carriers. They’ve been ripping people off for way to long. And to have to pay a “fee” when you upgrade is absurd.

  3. Maura Collins

    today you buy a factory unlocked phone and you go to what ever service offers the best deal. I save $ 2040 a year terminating my Verizon contracts. No more ripoffs! done for me it is not with the snob value to be able to say i am with Verizon and have the slowest 4G LTE on the market. Keep you slow LTE and if you want me back beat $110 a month for a family of 4 with unlimited international calling!

  4. How about offering a plan to pay $199 for a phone with a 2yr contract or pay $299 and sign only a 1yr contract. I’d pay the extra upfront for that plan, and may even keep the phone longer that the 12 months but not the entire 24. Give more options!!

  5. jpcrossman

    Your company is GREEDY…. you don’t make ANY attempt to retain your customers. However, you spare no expense for gaining new customers. I left you to go to AT&T! I get more for my money, and they appreciate me as a current customer. I was always willing to pay a bit more for great service, but when I see a company who is only for the almighty dollar, and insensitive to customer needs, it should be expected that one would depart your company to seek a company that provides great service, a stable network, and truly strives to secure a huge retention base of current customers, while offering great products, service, and incentives to grow your customer base. I don’t look back whatsoever and look forward to being a valued AT&T wireless customer for years to come. Your loss, VERIZON WIRELESS, has become AT&T’s gain!

  6. I am glad to hear this. Verizon is so arrogant in the way it treats its customers, charging hidden fees, dictating bad terms on a “take it or leave it” basis, etc. that this welcome development may finally force it to change. I’ve had enough of Verizon’s poor attitude towards customers, that ‘m switching to T-Mobile when my Verizon contract is up.

  7. mginwyo

    the next wave in smartphones and service is on the horizon too. Wifi smartphones that switch to 3/4g. Republic wireless has the moto x and g for half what verizon wants and plans that are as low as 5 bucks a month! 25 bucks for unlimited phone text and data on wifi, and unlimited text /phone on 3g. Unlimited 4g for 40 monthly. wifi is everywhere and likely at your home and office so why not save $ and use that?

  8. Verizon came out with an unadvertised plan on the 17th of April. It is called Month to Month Smartphone Discount Promotion. This works if you are out of contract, and you own your own equipment. You need to buy 10g of data for $100 per month to share and the line charge is $15 per smartphone. Verizon Edge does this also, only problem is you have to keep upgrading your phone and if you ever pay it off your line charge goes back to $40 per line. I had to call customer service to get it, they will not tell you about it in the store. I actually bought out the contract on one line that was still in effect until December and was able to keep the same number. Now I probably overbought on the data, but I was paying $220 per month for 3 phones with 6g of data, Now I pay $145 for 3 with 10G. Hope this helps some of you. There is one article on the net about it you have to search Verizon and Forbes Magazine.

  9. The Edge program is a rip off. You pay full retail cost of the device over the 24 month agreement, plus, you pay the same monthly service cost as those who do a regular upgrade. Those who have a regular upgrade only pay a monthly plan cost. The Edge program sounds like a good deal but it isn’t.

  10. GBERTKE

    AT&T is not that great! I went to the AT&T store a few weeks ago, and waited 45 minutes before I walked out! When I walked out to my car there were 4 AT&T employees outside smoking! I am going to go to WalMart, “I hate the store” however I can get unlimited everything for under $50.00 verses my $137.XX with AT&T!

  11. I was a Verizon customer for 8 years(?) Alltel before them. We upgraded to the Galaxy 3 and better package. I had 4 phones – 2 smart and 2 dumb. My wife had to change her phone 3 x’s because of bad phones. We decided that this wasn’t going to work for us (the phone was too big for me at work, and tech issues). We wanted to change the plan around and downgrade a little to smaller phones. They wouldn’t let us, said we were 1 day past deadline for changes. We called corporate, they said the store (SAMS) should have worked with us, but they can’t do anything about it. So we said screw you, paid the phone bill that was due, sold the phones on Craigslist. and went to Walmart Family Plan, about $68 bucks a month for 2 phones unlimited talk text and message. We REFUSE to pay early termination fees, that is their problem. We paid what we owed, what we used. They are trying to get us for $1200 plus fees. HA HA ! that’s not going to happen. By the way, those phones don’t really cost hundreds of dollars, that is a SCAM. We are much happier with a plan I can afford instead of $260 a month. Leave VERIZON. They aren’t worth it. Better plans, better service and better prices are down at your local Walmart. (or anywhere but VERIZON, for that matter)

  12. Matt from Lancaster, PA

    I am a current Verizon Wireless customer and have been for about 10 years now and I will be making the switch to T-Mobile very shortly. My cellphone bill with 2GB of data costs me about $98 a month (after taxes). My girlfriend also has a Verizon account and her plan with 2GB of data and unlimited texts cost her around $111 a month (after taxes). I dropped my cell phone in the toilet a few weeks ago and fried it. My contract just ended and now I have the decision to either upgrade or cancel my plan. I had been paying insurance of $8.95 a month for 2 years and if I want to replace my phone I have to pay a $100 deductible. So the total amount I would have to pay for the replacement phone would be $100 + ($8.95 x 24 months) = $315. That is what I would pay for a REFURBISHED 2 year old model replacement phone. My girlfriend and I looked into a family plan when she upgraded about a year ago and we might have saved about $10 a month total (not each).
    We just priced a family plan through T-Mobile and for $130 (before tax) a month I can get the new Galaxy S5 and she can get the iPhone 5c. Our plan would include unlimited talk, text, and 1GB each of data. We both use a little over 1 GB each of data but figured we could easily keep it around 1 GB with a little monitoring. T-Mobile does not charge overage fees if we go over 1GB. They just slow down your 4G LTE data (which is fine with me). After 2 years, if we decide to stick with our same phones, our bill will drop by $50 a month. The $50 a month is our payment plan for our phones.
    In conclusion we estimate that our bill, with taxes, for both of our plans and phones will cost us about $150 a month for unlimited talk, text, and 1GB of data for each of us with T-Mobile. After 2 years our bill will be around $95 a month if we decide to hold off upgrading phones for a little bit. I’m estimated the amounts for the taxes. This is a huge savings over our current bills. For both of our plans we are paying about $210 for LIMITED talk, LIMITED text, and 2GB each of data and the bill will never drop if we don’t upgrade. Verizon used to fix or replace any defects in our local store and the customer service was GREAT. That has all changed and I can’t wait to make the switch to T-Mobile. We will be going out this week to make the switch and you should too. Oh, and T-Mobile is paying my girlfriends early termination fees and letting us both keep our current phone numbers. The quality of verizon’s service is not a credible argument for me. My house is a deadspot and the 4G LTE is spotty at best.

  13. I dumped VZN a year and a half ago and went to Straight talk and still use VZN towers

    With Straight talk I get unlimited everything for $45 plus sales tax—with VZN I was paying $107 for 500 mins–500 txts and unlimited data which magically had an extra $3 charge over my $29 agreed upon price every month——–also is you looked closely at the bill there was a $7 charge for “misc” expenses—-so I have to pay more because you can’t run your company right?

    I’m saving $60 a month with better service—VZN is total rip off—good riddance.

  14. Joe Briggs

    The ‘Edge’ program is supposed to address costs and compete with AT&T. But, it actually costs more!!! Edge separates service from phone costs. A 4-phone/10-gb plan is $160/month. But, they REQUIRE that you purchase new phones and amortize the costs over 24-months, and add that to the plan. A I-phone 5S is $27/month. So 4 * $27 + $160 = $268. That is more than the current plan. Also, you can’t bring in 3rd party phones – they MUST be purchased from Verizon as ‘Edge’ phones. Sham.

    • I just signed up for the Edge plan this past weekend. I got the Galaxy S5 with 6gb for 120/mo, had I gone with 10 gb, it would’ve only been an additional $2. Didn’t need the extra data since I typically use about 4 gb per month. $120 is still steep, I think but wanted to comment for others that may take your word as truth. It’s definitely not $160/mo.

  15. The next thing Verizon customers that are buying a pad and paying the additional cost for it to be directly connected will be disconnecting it. My phone is my router for all my devices. I see no need to pay additional cost to connect other devices directly to Verizon. Consumers will be going to other places and buying discounted pads and tethering them to their phones to save tons of money. It is due time that the cell companies allow you to buy a package of say 20 gigs of downloads and let you put anything on it at no additional cost. The phone number cost them less than $1.50 to handle. Charging $10.00 for this or $20.00 for this is getting crazy. Let me buy my phones, pads, cameras, and other electronics and just pay the wireless services for the data. I am just waiting for the Goggle fiber and others with the radio signals to come through. I do not even need those speeds but it will drive cellular and cable companies to drop prices to survive with their then limited services. Supply and demand at its best.

  16. I’ve had AT&T and T-Mobile. terrible reception, dropped calls and my bill was not cheap for either. I may pay a bit more for Verizon but they have never let me down. Customer Service wise. My daughter’s cell was damaged and they replaced it in 24 hours. Bottom line they all cost money. You get what you pay for. A former AT&T and T-Mobile customer. Yes I’m staying with Big Red.

  17. Dan Lodi

    Wow really all I see is a negatives atmosphere it’s sad that I see this if you don’t like it …eat the etf fees and also I have to say is that Verizon’s customer service is actually very good I get helped right away and most of the reps are very knowledgeable I m a extremely educated consumer and even in store customer is great…

  18. No one mentioned about VZ by far has the best connectivity & reliability. I travel a lot I had to get out of on my ATT for bad connection…… nothing worse than drop calls for salesmen. Hope VZ come up with better pricing & customer service.

  19. Zapatos Rotos

    Let me say it again using proper grammar :0)
    Bye bye Verizon… HASTA LA VISTA BABY. You’re just sitting on your laurels thinking… WE GOT IT MADE!, no one is going to leave us, we are number one!!! Remember what happened to AT&T? surprise surprise

  20. Raymond Blankenship

    I have only been with Verizon for a little over 6 months. I can tell you we are not encouraged to sell accessories, push higher priced plans, or stick anyone with a contract they don’t want. We ARE encouraged to help the customer, and address their issues. I am proud of the customer service I provide. My handle time (for those who know what that means) is consistently high but I strive to give the customer the best customer service experience possible. This does not always mean giving them what they want (credits, waivers etc.) but when they hang up they know and understand fully the information I give them on their issues. Are the prices high? Maybe. Would my customer service life be easier with unlimited data? Absolutely. But I can tell everyone out there that the call center I work at is full of committed individuals who will stay with a customer for however long it takes to resolve their issues, and that is in my opinion what makes our customer service second to none.

    • Dan Lodi

      I actually agree with you on that and it’s excellent people like you Raymond out that make a very educated consumer happy the verizon rep I was on with in the sales department was very knowledgeable kind and understood my issues and actually was on the phone with me and the tech coaches and support reps rock ! Keep it up :) big red rocks :)

    • Matt from Lancaster, PA

      Who even calls into customer service centers anymore? Customers don’t want to call into a line where they are put on hold, transferred between reps, and ultimately have their problem unresolved. They want to do everything online, on their own time, and pay as little for that service as possible. You might deal with older generations or people who can’t do things for themselves but it’s not what the majority of your customer base desires.