Facing pressure from its fellow wireless carriers, Verizon Communications Inc. is offering free phones from Apple and Android to customers who get 5G unlimited plans.
Once a holdout on giveaways to existing customers, Verizon is now following similar trade-in promotions by peers AT&T and Bellevue-based T-Mobile US — part of efforts to reverse recent subscriber losses at the largest U.S. carrier.
Starting this month, new Verizon customers who chose a premium 5G unlimited plan can qualify for as much as $1,000 in credit toward an Apple iPhone or $1,100 for the Samsung Galaxy S21. Current customers are eligible for $700 toward an iPhone or $800 for an Android model if they move up to a higher-priced unlimited plan.
The move comes after Verizon lost 178,000 phone customers in the first quarter. In the same period, AT&T added 595,000 mobile-phone subscribers and T-Mobile led the group with 773,000 new phone customers.
The phone giveaway is aimed at reviving Verizon’s subscriber gains, as well as being a way to lure customers into higher-priced 5G unlimited plans. The more customer traffic Verizon can move onto its new, largely empty 5G networks, the less congested its 4G and 3G systems will be.
The 5G race is heating up. U.S. carriers have spent billions of dollars on airwave licenses and are building 5G wireless networks that promise speeds 10 times faster than current connections. T-Mobile has a lead of a year or more in 5G coverage after acquiring Sprint and its trove of midband airwaves.
AT&T, meanwhile, is spinning off its WarnerMedia division and will use a portion of the $43 billion in cash from that deal on its 5G network expansion plans. AT&T has been the most aggressive with phone prices, giving away new iPhones and Androids to new and existing customers who upgrade their plans.
Verizon was first to launch 5G, but the company’s ultrafast connections ride on tricky millimeter waves that don’t travel far or pass through leaves and glass. The company offers nationwide 5G service, but its super-fast 5G experience is available only in limited areas within 75 cities, 13 airports and more than 60 arenas.
While technically offering unlimited service, AT&T and Verizon both throttle connection speeds after customers reach certain data caps or if the network is congested. T-Mobile boasts that it never curbs the speeds of its unlimited customers.
The free-phone offers are a bit of a throwback. A decade ago, free handsets were a common way for carriers to lock customers into two-year contracts. Today’s offers provide credits on monthly device payments spread over two years or more. Customers who stick with the service for two years have their payments covered. Those who leave, on the other hand, are on the hook for the remaining phone payments.