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Verizon Increasing Ransom Required Before Prepaid Phones Can Be Used on MVNOs

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Verizon appears to be making it harder to use its Verizon Prepaid phones on other services. The carrier recently updated its Device Unlocking Policy page with new language saying that Verizon Prepaid phones must be used on Verizon Prepaid for up to one year before they can be used on any other service. Until this change, Verizon allowed prepaid phones to be used on MVNOs or on Verizon postpaid, provided they had been activated on Verizon Prepaid and the first month's payment made. You can see the old policy on the Internet Archive's Aug 30, 2016 copy of the page.

 The exact wording of the new rule is:

"We do not lock our 4G devices, other than our 4G Phone-in-the-Box Prepaid phones. In order to partially offset the subsidy we provide to make our 4G Phone-in-the-Box Prepaid phones more affordable to service customers, our 4G Phone-in-a-Box phones may only be used with Verizon Prepaid service for 1 year from original activation date or until payments in the amount specified on the back of the Phone-in-a-Box package are added to the Prepaid account."

The cheapest Verizon Prepaid plan for smartphones is $30/month for unlimited talk and text and no data. The new rule change means that the "ransom" needed to liberate a prepaid phone for postpaid or MVNO use is increasing from $30 to as much as $360!

This change may not be as bad as it looks however. The new rule requires use on Verizon Prepaid for "...1 year from original activation date or until payments in the amount specified on the back of the Phone-in-a-Box package are added to the Prepaid account." I visited my local Target store and checked the backs of the boxes of all the Verizon Prepaid LTE phones in stock. Target had the Samsung Galaxy J1 and Galaxy J3, the HTC Desire 526 and the LG Transpyre and Optimus Zone 3. They all had the statement statement on their boxes:

"Phone must be activated on Verizon Prepaid and the first monthly payment must be made before the phone can be used with any other service."

The good news is that, at least for the currently available Verizon Phones I saw, the 1 month payment policy is still in effect. However the change to the unlocking policy page signals that Verizon may start raising the ransom in the future. I can see them doing that, especially if they start selling higher end prepaid phones at subsidized prices. For example, Verizon might offer a $400 iPhone SE for $200 and require the buyer to make $200 in plan payments before allowing the phone be used on a different service.

What I don't like about the new policy is that if you are buying a Verizon Prepaid for use on a different service you now have to look at the back of the box to find out the ransom requirement. That's not always easy. Most big box stores have anti-theft devices that can make hard to see the back of the packaging. At my Target I had to struggle to maneuver the phone packages into a position where it was barely possible to read the back of the package by contorting my next into an uncomfortable position. For online shoppers it's impossible to see the back of a phone package in advance.

This is the second change that Verizon has made this year to its policy regarding the use of Prepaid LTE phones on other services. The one month rule was instituted on January 17, 2016. Before that there were no restrictions on using Verizon Prepaid phones on postpaid or on Verizon MVNOs. The LTE phone policy was in sharp contrast Verizon's long standing rule that non-LTE (3G) Verizon Prepaid phones must be used on Verizon Prepaid for six months before they can be used on Verizon MVNOS

I believe that Verizon adopted its original liberal unlocking policy for prepaid LTE phones to comply with the open access provisions of its Block C (band 13) LTE license. In January Verizon got away requiring one months payment and now it seems to be pushing the envelope of open access a little harder.

Source Verizon via HowardForums

31 comments:

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  1. Well 3g verizon devices had a six month use requirement and Sprint has a one year usage requirement for its Sprint Prepaid, Boost and Virgin mobile devices so it's somewhat in line with those policies. Honestly, I'm surprised Verizon's policy was so short and lenient for the time they had it but considering they've been losing hundreds of thousands of Verizon prepaid users a quarter I can see this as a change to partially offset that. I remember the old days when Verizon prepaid devices were directly activatable out of the box brand new on Page Plus and other Verizon mvnos but not postpaid. On prepaid, enjoy loopholes while you can as you never know when they will be changed or even taken away outright.

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    1. You're defending this behavior?! How could you? The days of users sticking to services that no longer match their current needs just because they are tied to a contract, or their phone is being held for randsom are OVER! Prepaid has too many great options to stick in such an unhealthy broken relationship. Slavery has long ended! We don't have to be slaves to our wireless providers like this anymore. These old business models die way too slow still, but they are dying.

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    2. I can defend Verizon's behavior. They are subsidizing their prepaid phones and expect some revenue back. If you don't like that, then you are free to purchase your own unlocked phone at full market price.

      Incidentally, this is exactly what I did. I bought an unlocked phone directly from Motorola.

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  2. I think it's possible that you may have misread the new terms Dennis. I don't think they require that the phone be used on Verizon Prepaid for 1 year. They seem to be saying that the phone can be used on another service 1 year after activation.

    "may only be used with Verizon Prepaid service for 1 year *from* original activation date"

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    1. You could interpret it to mean that a phone activated on Verizon Prepaid with no payments or only one payment made and the service allowed to lapse for a year could be activated on another service.

      I doubt that would work. Verizon's stated goal is to recover the subsidy on the phone not to encourage people to warehouse phones for a year.

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    2. So you think it's a hostage situation rather than a randsom? Either way, I don't see how it's a good situation for the end user unless they start giving away the phones. Not to mention how environmentally irresponsible it is to waste electronic resources locking up these devices. I'd be interested to read what the environmental impact is on these kind of decisions. Just reaffirms my strategy to avoid CDMA and switch over to unlocked GSM from now on.

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  3. As Dennis pointed out, existing Phone-in-a-Box packages do not specify an amount of payments to the Prepaid account, they say "first monthly payment."

    I could interpret the new rule as saying: if the box DOES NOT specify an amount, then unlocking the phone requires 1 monthly payment AND 12 months to have elapsed since activation. The phone DOES NOT need be ACTIVE on Verizon prepaid for more than the initial month while this 12 month period elapses.

    If the box DOES specify an amount, then the phone becomes unlocked as soon as that amount has been loaded. The more expensive of a plan is used, the quicker it gets unlocked. Simple.

    So I would like to see someone report upon an experience to either confirm or deny Dennis' conclusion that existing LTE phones still have ONLY the 1 monthly payment requirement for unlocking.

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    1. Reading the new rule even more closely, I could make this interpretation of this scenario: if the box DOES specify a payment amount, and the user stops paying for service and does not reach that amount, then the phone is unlocked after 12 months.

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    2. You could interpret it that way but I don't think that was Verizon's intention. I doubt that Verizon's activation funnel has been programed to accept prepaid devices on MVNOs one year after they were first activated regardless of how long they were active.

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  4. So, to recap: This new unlocking policy amounts to paying a 'ransom', will hurt the environment, and it's a backdoor endorsement of slavery!

    Nope, this site hasn't fallen off one bit

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    1. It's a ridiculous idea of a company harassing you and fining you for doing what you want with something that you have paid for and unfair and clear.

      Verizon having the best network, even twice as good as T-Mobile and Sprint, is very customer-friendly. But policies like this are very customer hostile. They will only drive Verizon customers to other services.

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  5. So has anyone activate one of these marked boxed phones on a VZW MVNO after apying the $30 ("ransom" VZW activation fee) since the 08-21-16 issue date of the policy ?

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  6. There's a simple solution to this new Verizon policy.. Don't buy their phones or their overpriced service. Go with a GSM carrier instead. If T-Mobile/MetroPCS coverage works for you, great! If not, go with Cricket. It has its flaws but Cricket is still a much better option than Verizon and their limited selection of prepaid phones. There really aren't too many scenarios where you would need to pay the price premium for Verizon over Cricket. I'm not saying they don't exist. I'm just saying that too many people are paying for Verizon when Cricket would serve their needs without realizing it.

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    1. For sure 5 lines 100$ Cricket is at&t

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    2. I've got 2 lines on Cricket, 22.5 gb of data total, for $90

      I simply don't need two more lines.

      Anyway, I'm pretty sure something similar with Verizon Prepaid would cost me about $240. (two $60 plans with 5GB, and then all the high speed data overage charges to get 12 more GB of data, which appears to cost $10 per 1 GB)

      Verizon has some more coverage than Cricket... but not to warrant paying much more than twice as much.

      The same sort of thing on AT&T Postpaid (using Mobile Advantage) appears to be about $150. Again, a lot more than the $90 I pay for Cricket Wireless.

      Cricket's throttled 8mbps is slower than postpaid Verizon or AT&T, yes. Fast enough to stream all music and also video from Netflix and HBO. But when I ask what this 8mbps speed prevents me from doing compared to much faster high speed data, I only hear crickets.

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  7. I am surprised Verizon isnt trying to compete with Cricket.

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    1. Verizon has been pretty open about their lack of interest in the prepaid market, strangely. They are still trying to push their old business model with their old technology (the tech still works great, perhaps better than GSM in some ways, but they control it-tightly- so you will be their slave if you are unfortunate to have to use it).

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  8. Verizon management hates prepaid, they offer it only cause they have to. If they had their way, they would have only postpaid customers as that's where they make their money.

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  9. If you buy one of these phones can you use it over wi fi without activating it on Verizon prepaid?

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    1. Any phone can be used without activating it.

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  10. >>>our 4G Phone-in-a-Box phones may only be used with Verizon Prepaid service for 1 year from original activation date<<<

    Dennis, I think it means that a phone can only be used on Verizon Prepaid for no longer than one year, and after that a new phone needs to be bought. Basically, Verizon will lock the phone OUT of its Prepaid service.

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    1. Nope.

      For 1 year, the phone can only be used on VPP until the ransom is fully paid off.

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    2. I disagree. Such a policy is not only ridiculous, but is inconsistent with being on a webpage about device unlocking.

      It's all about the location of the "only." If it read "our 4G Phone-in-a-Box phones may be used with Verizon Prepaid service for ONLY 1 year from original activation date," then that means your interpretation.

      Still, the wording they have isn't the best. It is not compulsory that the phones be at all active/"used" during the first year, rather the limiting factor is where it may be active/"used". It would be most accurate for it to read: "our 4G Phone-in-a-Box phones may be used ONLY with Verizon Prepaid service for 1 year from original activation date."

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    3. I see now. Thanks for making it clear! What a huge change, from just one month to one year...

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  11. Motorola Moto G4 Play lands on Verizon prepaid priced at $85. By the price of this device, this device might be the first device that falls under Verizon Prepaids updated POLICY on unlocking and/or to be able to be used on a MVNOs or on Verizon postpaid.

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    1. Where did it land? I haven't seen the Verizon G4 Play anywhere yet.

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    2. https://www.verizonwireless.com/prepaid/smartphone-plans/moto-g-play-droid-in-black+prepaid/

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  12. https://www.verizonwireless.com/support/prepaid-customer-info-legal/

    6 months for a 3g device,

    1 month for a 4g lte phone

    I don't see the problem as of right now.

    This was posted September 18, 2016

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  13. This is how it says it on the back of the Verizon Prepaid phone-in-a-box. the first device with this printed on it was the HTC Desire 530 - {Phone may only be used with Verizon Prepaid service for 1 year from original activation or until a minimum payment is received. Visit http://vzw.com/prepaidunlockingpolicy for more details.}

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  14. I purchased a new Verizon prepaid Galaxy J3 phone in a box in August,activated it and paid the required 1 month ransom then unsuccessfully attempted to activate on Tracfone,Puppy wireless and Boom mobile. Verizon support verified the phone was not locked but none of the MVNOs was able to activate my phone.

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