Verizon Wireless has seen some success getting their off-contract customers who have stubbornly refused to upgrade their phones to jump on board the smartphone craze… by lowering their prices.

The entry fee for smartphones on most carriers includes the up front cost of the device (often $199 for the most coveted phones) and a $30 monthly mandatory data plan.  That’s a price too high for many consumers to pay in this economy, and the result has been an increase in the number of customers letting their two-year contracts expire.

AT&T has tried to reduce the bite with a paltry $15 monthly plan that only includes 200MB of usage per month, which is nearly pointless for smartphone users who want to really use the multimedia features the phones were designed to provide. Verizon responded with a holiday season promotional offer charging $15 a month for an even lower 150MB per month, with widespread speculation the “limited time only” part of the offer will soon become “available every day.”

But for most smartphone customers who plan to regularly use data-hungry applications, neither “budget plan” will suffice.  That leaves one alternative for Verizon customers — the $29.99 unlimited plan.  Ouch.

To prod price-sensitive customers, Verizon has offered family plan members the option of upgrading their old phones to new smartphones, and has sweetened the deal with a $10 price break.  While technically a credit on the “additional line” charge, some Verizon employees pitch the discount as a reduction in price for the mandatory data plan.  Where $30 a month sounds obscene, $20 a month sounds somewhat better.

The offer has proven sufficiently successful that Verizon has now extended it until Jan. 30 (note just prior to next month’s iPhone introduction) and any customer who has not upgraded their phone in the last 180 days qualifies.  A new, two year contract is required and the offer is good if you want to add a new secondary line.

Unfortunately, the offer does not extend to the primary line.  Verizon would probably see an even larger number of upgrades if the offer extended to every legacy phone on a customer’s account.

The $9.99 credit applies for 24 months.  Over the life of the contract, that is worth $240 in savings per smartphone, which isn’t bad from America’s Cadillac wireless carrier.

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Richard Doherty, research director at Envisioneering Group, Craig Moffett, an analyst at Sanford C. Bernstein, and Bloomberg Businessweek’s Roben Farzad talk about Verizon Wireless’s agreement to start selling Apple Inc.’s iPhone. They talk with Pimm Fox and Julie Hyman on Bloomberg Television’s “Taking Stock.”  (9 minutes)

It’s official.  Verizon Wireless will welcome Apple’s iPhone to its network next month, but in a glaring omission, company officials refused to discuss data pricing for the all-important data plans that will power the wildly popular smartphone.

The official announcement of the iPhone on Verizon came late this morning in New York at a press event hosted by Verizon’s president Lowell McAdam.  Joining him was Tim Cook, Apple’s chief operating officer. Neither Steve Jobs or Verizon CEO Ivan Seidenberg were on hand for the event.

“Late in 2010 we started offering the Apple iPad and today we are extremely gratified to announce that the iPhone 4 will be available early next month,” MacAdam said. “Our relationship with Apple has developed over the last two years. Back in 2008 we started talking about bringing the iPhone to a CDMA network, and we spent a year testing.”

“All of Apple is very excited to bring the iPhone to Verizon’s customers,” added Cook.

The new phone will be available for pre-orders, exclusively for existing Verizon Wireless customers Feb. 3.  A week later, anyone can reserve the Verizon iPhone at Verizon Wireless or Apple stores, or online.  The new phones will cost $199 for the 16GB model, $299 for the 32GB model with a new two year contract.  The phones will work on Verizon’s 3G network, but not on their new LTE/4G network.

Verizon is so confident its network can handle the traffic, it is bundling, for free, a mobile hotspot with the phone that will allow up to five devices to share the iPhone’s 3G connection over Wi-Fi.  That means you can use a laptop or home computer with a wireless card and connect to Verizon’s 3G wireless broadband service without any additional equipment.

But Verizon’s press event left some questions unanswered, starting with whether the company would sell unlimited data plans to accompany the phone.

“We talked about the device pricing, but we’re not going to talk about the pricing for the network for that connectivity,” Verizon Wireless CEO Dan Mead said. “We’ll have announcements in the future.”

Another downside: the Verizon iPhone will not be able to multitask.  If you make or receive calls on your phone, your data connection is suspended for the length of the call.  This is common on CDMA cellular networks, and it currently affects other smartphones used on Verizon’s network as well.

As far as Apple sees it, that isn’t much of a problem so long as the phone works on Verizon’s network.

“I can tell you that the number one question I’ve gotten is when will the iPhone work on Verizon,” said Cook. “I couldn’t be happier to tell people that. They will make those sorts of trade-offs.”

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Lowell McAdam makes the official announcement.  (2 minutes)

Disgruntled AT&T customers, and those with infinite patience for Apple’s iPhone on Verizon Wireless’ network — your long wait appears to finally be over.

After nearly a year of speculation, Verizon Wireless is expected to announce the imminent arrival of the coveted smartphone on the nation’s largest wireless carrier at a press event tomorrow.

The Verizon version of the iPhone could come at a price premium, with some anticipating the entry level version of the phone could be priced as high as $249 — $50 higher than with AT&T.  The usual two year contract applies.

Analysts predict a muted stampede, at least at first, by unhappy AT&T customers.  As many as two million customers itching to dump AT&T could jump to Verizon in 2011, but they’ll pay dearly to do so.  First, their existing AT&T iPhone won’t work on Verizon’s network, so that means a new phone and a new, two year contract with Verizon to get the best price.  Second, AT&T locked many of its customers into two year contract extensions with the release of the last iPhone in June.  No amount of whining by iPhone users, which has worked to score early upgrades and discounts in the past, will get AT&T to make the price of divorce less expensive.  The company’s price to sever ties: more than $200 for most in-contract customers with the latest version of the popular phone.

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CNBC discusses the pros and cons of Verizon’s adoption of Apple’s iPhone in these two reports.  (8 minutes)

Verizon iPhone users will also give up something else: an iPhone that can multitask.  AT&T’s GSM network allowed customers to browse web pages and run applications while you talked on the phone.  Verizon’s CDMA network doesn’t support that.  As long as you talk on your phone, your data applications won’t update.  It’s an either/or proposition, at least for now.

Still, expect the iPhone to be a Verizon hit like none other.  Carl Howe, an analyst for the Yankee Group, expects Verizon to sell 16.5 million iPhones in 2011, with more than half — 9 million — coming from Verizon’s own subscriber base.

The question is — can Verizon’s three bedroom house support the entire extended family showing up on their network doorstep?

AT&T’s network suffered from the onslaught of data-hungry iPhone devotees.  As millions of Americans adopted the phone, an AT&T exclusive, the company’s wireless network groaned under the usage.  With calls dropping, data trickling, and customer service irritating, AT&T scored rock-bottom in consumer ratings.

Some wonder if the same fate could afflict Verizon’s network.  Verizon currently has the lowest percentage of smartphone customers using its network among the four major carriers.  Verizon’s pricing is typically considered the culprit.  Customers insisting on the iPhone ended up with AT&T.  But those seeking Android phones had more choices — Sprint’s unlimited data plans at aggressive price points, T-Mobile’s value-oriented family shareplans, or Verizon’s robust network coverage at Cadillac pricing.

Putting the iPhone, already a premium-priced phone some consumers can’t live without, with Verizon’s reputation for high quality service, is expected to be a winning combination, and 16.5 million customers joining Verizon’s existing 30 million smartphone customers in a single year could have a dramatic impact.

“Unless Verizon has done a lot of network upgrades in advance, it may see many of the same capacity problems that have plagued AT&T,” Howe says.

The news AT&T is about to lose its exclusivity for the phone was taken in stride by some company executives, one who used the occasion to take a swipe at Verizon’s slower speed 3G network.

AT&T public relations head Larry Solomon pointed out Verizon’s 3G network relies on 3.1Mbps EVDO Rev. A technology while AT&T delivers 7.2Mbps on its HSPA 3G network.

The iPhone is built for speed, but that’s not what you get with a CDMA phone,” Solomon told Electronista. “I’m not sure iPhone users are ready for life in the slow lane.”

Verizon Wireless is expected to unveil the new phone Tuesday morning, with its in-store availability expected within a few weeks.  For fans of unlimited usage, there is one more piece of good news: Verizon is expected to continue offering unlimited data usage plans to its new iPhone customers.  AT&T cashiered its own unlimited data plan last spring, forcing customers to keep usage under 2GB per month if they don’t want an even higher bill.  Verizon is reportedly confident its network can sustain the traffic, and will leave its data hungry customers alone… for now.

Apple Insider produced this chart comparing Verizon and AT&T's smartphone pricing.

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WTTG-TV in Washington delivers the news about the imminent arrival of the iPhone on Verizon’s network in a consumer-friendly fashion, while Bloomberg delves deeper into exactly what impact the move will have on existing and future customers of both AT&T and Verizon.  (9 minutes)

Verizon's new upgrade policy, courtesy of Android Central.

Verizon Wireless is making changes to their handset upgrade programs, all to the benefit of their bottom line and not to yours.

In training materials obtained by Android Central, Verizon is discontinuing its “New Every Two” handset discount program for customers who sign new contracts after Jan. 16 and will stop allowing customers to obtain early upgrade discounts on new phones before their contract nears expiration.

The “New Every Two” promotion has been a familiar part of Verizon Wireless service for years.  Customers finishing their two year contracts receive a $50 discount on their next new phone with the carrier, as long as they sign a new two year contract.

Early upgrades, which used to qualify customers for discounts during months 13-20 of their 24 month contract, are coming to an end as well.

There is some speculation the early upgrade plan is being curtailed to try and stop a rush on the rumored Verizon iPhone due early this year.

Since many customers upgrade to more expensive smartphones, the “New Every Two” program only delivers a discount, not the new free phone it provided in an earlier era.

Still, the loss of discounts will effectively give the biggest benefits to Verizon Wireless’ bottom line, allowing the company to reduce subsidies it pays on behalf of customers demanding the latest and greatest new phones.