My experience was different. I wasn't on an unlimited data plan with Verizon. As I mentioned earlier, when my two-year contract expired, I argued that my monthly payment should be less since the subsidy requirement was met. I should only pay for cell services going forward. The manager didn't agree. In fact, he insisted that they didn't subsidize a phone's cost! He said if I had brought a phone to Verizon, monthly service fees were the same. Yet I wasn't paying monthly installments either. Legally, that would have to be divulged in the contract.
In hindsight, Verizon was being clever. Technically, if the phone were subsidized, that would imply that Verizon paid a portion of the phone's cost. Verizon would have advertised the phone's MSRP and said, "We'll pay the difference." Instead, Verizon said on paper that I paid $200 for the phone. Done. My monthly payment was for service only, but I was contractually obligated to be their customer for two years to qualify for the discount. And if I recall correctly, the penalty for canceling didn't state that you had to pay a remaining balance for the phone. It said I you had to pay a specific amount ($400?)
I'll bet dollars to donuts that if I had broke my contract and were taken to court, Verizon would have only been able to sue me for the penalty. They would not have been able to reclaim the phone since I had already paid for it ($200) according to them.
Regardless, the experience taught me that Verizon's service was overpriced and wasn't going to improve for me. I switched carriers.
We're talking about different timeframes. Back when all post-paid plans were under the subsidy model, none of the carriers would discount your service fee after the contract duration was fulfilled. This extends back into the pre-smartphone days. I remember when the RAZR first came out, it was $200 with a contract. If you bought it out of contract (which happens if you got your phone lost or stolen or broken), it was like $800. The difference between what you paid and what the carrier paid for it is the subsidy (note - the carriers didn't necessarily pay $800 for the RAZR, but it was certainly more than $200). Now they can call it whatever they like, it doesn't matter. What matters is that you weren't paying the full cost of the phone with that $200 up front charge.
Back then, the carriers would routinely allow customers to upgrade they phones at the subsidized price after about a year or so, but a lot depended on how much of a subsidy they got in the first place. Let's say you paid $200 for a RAZR and that it cost Verzion $600 (for a subsidy value of $400), they might let you upgrade at about 16 months. But if you paid $100 for a Moto 755 that cost them $400 (subsidy value of $300), they might let you upgrade at 12 months.
Back then all of the US carriers used the subsidy model but would keep charging the same monthly fees, whether you were in or out of contract. Honestly, they loved it when folks would kept their phones for 3 to 4 years. Didn't matter if you were in or out of contract because it was such a hassle to change carriers since you'd need a new phone number and have to re-enter all of your contact (doesn't apply to GSM phones where the address book was on the SIM). This extended into the early years of smartphones.
Fast forward a few years around 2013 or so. The subsidy model was still available, but (in the US) the phone number porting rules gave customers more leverage. Plus LTE becoming more a standard meant that phones could be used across carriers (sort of). Both AT&T and Verizon was getting sick of people hanging onto their unlimted data plans and also updating every 2 years (or sooner). They were getting hit on both ends. Folks were savvy enough to make sure they always upgraded as soon as they could (costing the carriers $450 each time). Folks were also threatening to switch more and more often because it was so much easier by then.
That's when the carriers modified their plans to give a discount on your connection fee when your 2 years ran out. If you wanted a new subsidized phone, you'd sign a 2 year contract and the connection fee was $40/month. If you kept your phone or bought it out-right, the fee would be $15/month. The exception was, and continues to be, grandfathered UL plans on AT&T and VZ.
A few years later, T-Mobile shook everything up by getting rid of contracts entirely. They went with basically a 0% financing plan, but once your phone was paid off, your monthly fee went down. They basically made the subsidy portion transparent. AT&T and VZ followed suit with their NEXT and Freedom financing plans.
And that's where we're at today.
Just curious, what kind of plan are you on today?
