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Verizon cranks up competitive intensity with new 5G promotion

Verizon on Tuesday announced a new mobile phone promotion designed to respond to incursions by its rivals and to increase the number of customers who subscribe to its more expensive unlimited plans.

The operator framed its announcement – which offers free 5G smartphones to new and existing customers who subscribe to the carrier's Do More, Play More or Get More unlimited plans – as a way to help its customers upgrade to 5G, arguing the promotion will "put the power of Verizon 5G in the hands of every customer."

But the new offering is also likely a response to similar promotions from rivals AT&T and T-Mobile. AT&T kicked off the trend late last year when it began offering the new Apple iPhone 12 for free to new and existing customers. T-Mobile joined the trend in April when it announced it would give a free 5G smartphone to all new and existing customers.

While the details of the various promotions all differ, collectively they signal a rise in the level of competition in the US wireless industry as operators work to meet Wall Street expectations around customer growth and financial profits.

The fine print

As reported by Cnet, Verizon's new promotion is only available to customers who choose its more expensive Do More, Play More or Get More unlimited plans. Those plans generally cost $10-20 per month more than the carrier's cheapest Start Unlimited plan.

Verizon's more expensive unlimited plans can access Verizon's speedy "ultra wideband" 5G network that works on its millimeter wave (mmWave) or C-band spectrum. Verizon's Start Unlimited plan cannot access its "ultra wideband" network and is therefore limited only to Verizon's "5G Nationwide" network, which is not much faster than its 4G network.

Verizon's goal is to get 50% of its customers to subscribe to its more expensive "premium unlimited" plans by 2023, up from 21% today. Thus, it's designing its promotions with that goal in mind.

As for Verizon's offer of free 5G phones, the operator said customers can trade in their existing devices in order to get up to $800 toward the purchase of a new smartphone, such as the iPhone 12 mini 64GB or Samsung Galaxy S21 5G 128GB.

Further, Verizon is also offering up to $300 to customers who switch to Verizon from another carrier.

While Verizon and other carriers have offered similar promotions in the past, Verizon's newest campaign certainly signals a renewed effort by the carrier to both retain its existing customers and obtain new ones.

A competitive market

Some financial analysts have expressed concern that wireless network providers in the US are preparing for an all-out pricing war as Americans emerge from their homes amid waning COVID-19 worries thanks to widespread vaccinations, primed to begin shopping again.

"On the competitive situation ... it is a competitive market and it's been for quite a while," Verizon CEO Hans Vestberg said in April in response to a question about the competitive landscape.

Vestberg added that Verizon will look to grow both its customer base and revenues, but will do so with "financial discipline."

Nonetheless, it's clear that Verizon is unwilling to let AT&T and T-Mobile offer free 5G phones without a competitive response.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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