Bonnie Cha

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Verizon Looks to Edge Out Competition With Six-Month Upgrade Program

And Verizon makes three.

As expected, Verizon is joining AT&T and T-Mobile in offering a new program that will allow customers to upgrade their phones more frequently than every two years. The plan is called Verizon Edge, and it will launch on Aug. 25.

With Verizon Edge, you pay the full retail price of a phone, along with a month-to-month service plan. The cost of the handset is divided into 24 monthly installments, and the first payment is due at the point of sale.

If, after six months, you decide you want to upgrade your phone, you can do so, as long as you’ve paid 50 percent of the unsubsidized price, and the phone is still in working condition. Once you trade in your device, all final payments are waived, you choose another handset of your liking, and start all over again.

Unlike AT&T, Verizon Edge is available for basic and feature phones, not just smartphones. And contrary to some earlier reports, Verizon Edge doesn’t include a finance charge, program fee or upgrade fee.

So, let’s say, for example, you want to get the Samsung Galaxy S4 now. The full retail price of the 16 gigabyte Galaxy S4 is $650. If you know you want to switch to something new after six months, you will need to pay about $54.17 per month to cover half of the phone’s total cost ($325). But, more realistically, you’ll upgrade in a year when the next version of the phone comes out, so the monthly payment will be $27.08.

On top of that, you need to pay for one of Verizon’s Share Everything plans, which starts at $40 per month for unlimited voice and texts and 300 megabytes of data. Customers who were grandfathered in with an unlimited data plan will lose that privilege if they decide to participate in Verizon Edge.

So how does Verizon Edge compare to the competition? Well, AT&T’s Next plan allows customers to upgrade every 12 months based on a 20-month payment cycle. Meanwhile, T-Mobile’s Jump program requires a $10 monthly program fee but lets you get a new phone twice within a year (six months after initially joining the program), and requires an initial down payment for the device.

Not surprisingly, each carrier argues that its new upgrade policy is better than the others’. T-Mobile’s argument is that it has taken the cost of device subsidies out of its rate plans, whereas AT&T and Verizon continue to charge the same prices for their data plans, even though you’re now paying full price on a phone.

AT&T says its Next plan doesn’t require a program fee or down payment like T-Mobile. And Verizon’s argument is that it has the better network.

“We absolutely believe this is a better value,” said Ken Dixon, vice president and chief marketing officer at Verizon, in a phone interview with AllThingsD. “Customers want the latest and greatest in technology, but they also want to be on the best network.”

Verizon touts its 4G LTE network as the largest in the nation, covering 500 markets and more than 298 million people. AT&T’s LTE network is currently available in 328 markets, and T-Mobile, which just launched its 4G LTE network in March, is now live in 116 metropolitan areas.

Over time, the footprint of the various carriers’ networks may become less important as they catch up with each other, so Verizon is also emphasizing that Verizon Edge gives its subscribers another choice in the way they buy devices.

“We’ll continue to offer phones on contract for customers. We think that will continue for a long time, and that’s what customers have gravitated toward,” said Dixon. “But Verizon Edge is the next evolution of our program. We have many people coming in saying they want the latest and greatest in technology, and we think this a great option for those customers.”

Update, July 18, 3:40 pm, PT: This post has been updated with a clarification about the frequency of upgrades allowed by T-Mobile Jump.

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