Low EIP Adoption is Affecting Verizon's Bottom Line

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As the mobile industry moves away from 2-year contracts and subsidized handsets, equipment installment plans that let a customer integrate the cost of a device into their monthly bill over time have quickly become the new industry standard. While EIPs have become incredibly popular across most carriers, the variety and differences between carriers' customer sets makes itself clear at times. One example is the fact that Verizon rolled out EIPs and have not quite gotten customers on the hook, whereas T-Mobile and Sprint have been doing quite well with the new customer model. Speaking at 2016's MoffettNathanson Media And Communications Summit, Verizon CEO Fran Shammo pointed out that EIPs in April only made of 68 percent of the carrier's new phone sales for the month.

Since rolling out EIPs last year, Verizon has seen the figure grow slowly, then seemingly plateau around April's rate, with most customers on old contracts choosing to renew and a good chunk of new customers preferring to simply buy their new devices outright. Whereas device subsidies are hard losses for carriers, coming in exchange for new or continued patronage, EIPs take much of the risk and extra cost out of the equation. The customer pays for their own device and, should they ditch, the carrier calls the tab and whatever is left of the device's cost becomes immediately due. EIPs also typically come with a credit check, making the likelihood of a customer flaking out much lower.

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Along with the continuation of contracts, Verizon is seeing customers hold onto their phones longer, just like all of the other carriers' customers are. For most consumers, some of the more compelling devices from 2014 and even as far back as 2012 may be all they really need; take the meticulously crafted and speedy LG Optimus G from 2012 or 2014's Samsung Galaxy S5, for example; both offer excellent build quality, great displays, LTE data speeds and adequately fast processors paired up with a perfectly serviceable 2GB of RAM. As the industrywide adoption of EIPs is only now starting to reach maturity, however, it's anybody's guess as to whether these customers are happy enough with their devices to keep them for the long haul, or if they want to upgrade, but can't seem to find anything on the current market that speaks to them.

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Senior Staff Writer

Daniel has been writing for Android Headlines since 2015, and is one of the site's Senior Staff Writers. He's been living the Android life since 2010, and has been interested in technology of all sorts since childhood. His personal, educational and professional backgrounds in computer science, gaming, literature, and music leave him uniquely equipped to handle a wide range of news topics for the site. These include the likes of machine learning, Voice assistants, AI technology development news in the Android world. Contact him at [email protected]

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