As Verizon Wireless prepares to offer the Apple iPhone next month, the carrier has dropped a promotion that would have given new customers an additional discount on a phone if they renewed their contract after 20 months.
A Verizon spokeswoman confirmed in an email sent late Thursday to InformationWeek that the carrier was dropping its "New Every Two" promo for people who sign up for the service starting Jan. 16, which is roughly three weeks before the iPhone 4's debut on Verizon. The promotion offered customers as much as $50 off their next phone, if they renewed a two-year service contract after 20 months.
iPhone pricing starts at $599, so carriers heavily discount the smartphone in order to entice customers to take out a two-year service contract, which is where the profits are made. AT&T, which has been the exclusive carrier for the iPhone in the U.S., sells the latest version, the iPhone 4, for as low as $199.
Verizon is scheduled to start offering the iPhone 4 to new customers Feb. 10. Current customers can purchase the smartphone starting Feb. 3. Verizon's latest move avoids having the carrier discount the expensive smartphone further in the future, at least for customers signing up on or after Jan. 16. Like AT&T, a two-year service contract from Verizon will get the customer the 16GB iPhone 4 for $199 and the $32 GB model for $299.
People who have agreed to renew their two-year contracts before Jan. 16 under the New Every Two promo will be able to use the credit on an iPhone or any other device in the carrier's portfolio, the spokeswoman says. "Nothing changes for existing customers who currently have a New Every Two credit."
Verizon is likely to avoid a price war with AT&T over the iPhone by competing over services. Verizon has already said it will let iPhone customers use the device as a mobile hotspot capable of connecting up to five other devices to the Internet via Wi-Fi. The carrier hasn't said how much it will charge for the feature that AT&T doesn't offer. Verizon also hasn't spelled out the pricing plans that will be available for voice and data service.