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By Sinead Carew
NEW YORK, July 18 (Reuters) - Verizon Wireless will letcustomers upgrade cellphones more frequently if they pay fortheir devices in installments, but analysts expect few takersunless the leading wireless provider lowers monthly service feesas well.
Analysts said customers would effectively be paying fortheir smartphone twice under Verizon's plan and a similaroffering announced by No. 2 U.S. mobile service provider AT&TInc on Tuesday.
"We will not touch our service pricing," VerizonCommunications Chief Financial Officer Fran Shammo said in an interview after the company's earnings conference call onThursday.
He said the new Verizon Edge offer, to be launched on August25, would not have an impact on Verizon's financial results.
Shammo said he does not expect a large percentage of Verizoncustomers to opt for Edge as most customers would still preferto buy a new phone at a discount upfront and wait two years foran upgrade.
"You'd have to be out of your mind," to accept this newoffer, Moffett Research analyst Craig Moffett said.
More frequent upgrades should mean more sales for phonemakers including Apple Inc and Samsung Electronics Co.
But "the plans Verizon and AT&T are talking about wherethey're cutting subsidies upfront without lowering the serviceprice are unlikely to have any impact in the market whatsoever,"he said.
Under Verizon's new plan, customers would pay for new phonesover 24 months, but they can upgrade after 6 months as long as50 percent of the device cost is paid up. Monthly service feeswould remain.
Verizon Wireless, a venture of Verizon Communications andVodafone Group Plc, currently requires customers tocommit to contracts in exchange for a sharp discount on theupfront price of their phone. Verizon pays an upfront subsidy tophone makers and recoups the cost gradually through the monthlyservice fees it charges customers.
Consumers who like to own the latest gadgets have beenfrustrated with this approach because it makes them wait atleast 2 years for an upgrade. Carriers have recently beenallowing upgrades less frequently in order to save on thesubsidies, which tend to hurt their profit margins.
AT&T has also said that it would not change the servicepricing under its new upgrade plan called AT&T Next.
However, T-Mobile US, the No. 4 U.S. wirelessprovider, cut service fees when it started offering phoneswithout subsidies. Earlier this year it completely eliminatedsubsidies.
Shares of Verizon, which reported quarterly results onThursday, fell 1.8 percent to $49.84 on the New York StockExchange.
