Verizon CEO Dan Schulman used the company’s first quarter 2026 earnings call on April 27 to deliver a message that is either bold or obvious depending on how you look at the wireless industry, and based on what the numbers show, it appears to be both.
Free phones and free lines are over at Verizon. Not reduced. Not harder to qualify for. Over.
“We are no longer giving away lines for free,” Schulman said on the call. “The era of just the free handset, that’s gone right now.”
He then explained why, and the explanation is the part worth understanding.
The free phone strategy was not just expensive. It was actively making Verizon’s customer satisfaction worse while spending $1,000 per customer to do it.
The Problem Verizon’s CEO Has With Free Phones
Schulman’s critique of Verizon’s previous approach is one of the more honest pieces of corporate self-examination a telecom CEO has delivered in recent memory. He described, in specific terms, what the free handset strategy actually produced.
“If a customer calls us and says that they’re having difficulty with service in their home, previously, what we would have done is send them a free handset so that they wouldn’t churn,” he said. “What happened at that point is the customer, who has a new handset, still has poor service at their home. So we just spent like $1,000 and did not solve the customer’s issues.”
The example is almost cartoonishly inefficient. A customer who cannot get a reliable signal in their house calls Verizon to complain.
Verizon, worried about losing the customer, sends a free phone. The customer now has a new phone and the same bad signal.
They still have poor service. They will eventually leave anyway. And Verizon spent a thousand dollars on the transaction.
The alternative Schulman described is a femtocell, a small network extender that boosts signal availability in homes and offices where the broader wireless network does not reach reliably. “If we had listened and sent a femtocell to be installed at the house, we could have done that at one-third the cost and made the customer happy.”
Same problem. Better solution. One-third the cost. The customer is actually satisfied rather than simply placated with new hardware.
Schulman’s broader argument extends this logic across the entire promotional strategy.
“Our industry has been too dependent on free handsets being the solution for everything,” he said. “And I think all of us, and I know, for sure, Verizon, can be much more profitable when we start to micro segment and really listen to what a customer wants and not just give them a free handset for everything.”
Why Verizon Needed This Conversation
Verizon did not arrive at this strategic shift from a position of strength. The company that Schulman inherited when he became CEO in October 2025, replacing Hans Vestberg, who was ousted after years of customer losses, had been bleeding subscribers for three years.
The total, 2.25 million customers who switched away from Verizon between 2022 and 2025.
The churn numbers tell the deterioration story. Wireless postpaid phone churn reached 0.98 percent in 2025, up from 0.88 percent in 2024.
In a business where the entire value proposition depends on keeping customers month after month, an upward churn trend is the fundamental warning sign that strategy is failing.
Schulman said at a January 2026 earnings call that the losses were “largely from prior pricing actions as well as competition.”
The previous leadership had been raising prices without adding corresponding value, a formula that works until customers decide their phone bill is the easiest monthly expense to cut.
Schulman came in and made immediate changes. In November 2025, Verizon laid off more than 13,000 employees in what the CEO described as an effort to “simplify” operations and make the company more customer-focused.
He vowed that Verizon would stop raising prices without adding value. He said the company would stop enforcing price increases that “irritated customers.”
Now he is ending the free handset and free line promotions that have been the telecom industry’s default retention tool for years.
The Numbers That Suggest It Might Be Working
The Q1 2026 results that accompanied Schulman’s earnings call show early signs that the new approach is producing results, though with enough caveats that Schulman himself acknowledged there is still work to be done.
The headline number is the one that has not happened since 2013: Verizon added 55,000 net postpaid phone customers in the first quarter of 2026. Postpaid phone subscribers, the customers who pay monthly under contract and carry the largest bills, had been declining at Verizon for years.
Getting back to positive territory in Q1, historically the most difficult quarter for subscriber additions, is a meaningful reversal.
Year-over-year, the improvement is more than 340,000 subscribers, the difference between where Verizon was losing customers in Q1 2025 and where it stands adding them in Q1 2026.
Consumer postpaid phone churn, which measures specifically the residential lines, not business accounts, fell to 0.90 percent for the quarter, a sequential improvement of 5 basis points from Q4 2025.
Within the quarter, churn improved further in March, falling below 0.85 percent. “That is a significant improvement both sequentially from Q4 and within the quarter, and it reversed the upward pressure we had seen in churn over the past several years,” Schulman said.
The cost story is perhaps the most striking single metric. Verizon’s cost of acquisition and retention in March was down approximately 35 percent relative to the end of Q4 2025.
The company is adding customers at significantly lower promotional cost than it was just one quarter ago.
That is the financial consequence of ending the free phone and free line giveaways, not just changing the customer experience but directly improving the unit economics of every new subscriber added.
Total operating revenue came in at $34.4 billion, up 2.9 percent year-over-year. Adjusted EPS of $1.28 beat analyst estimates and represented 7.6 percent year-over-year growth, the highest growth rate in more than four years.
Verizon raised its 2026 adjusted EPS guidance to a range of 5 to 6 percent growth, representing $4.95 to $4.99 per share.
Prepaid net additions totaled 115,000, the seventh consecutive quarter of growth in that category.
Broadband added 341,000 net connections including 214,000 fixed wireless subscribers and 127,000 fiber subscribers. Verizon ended Q1 with approximately 16.8 million total broadband connections.
The caveats are real. Service revenue of $28.76 billion came in about 0.8 percent below most analyst estimates.
Fixed wireless net adds of 214,000 were lower than the 264,000 anticipated. Fiber additions of 127,000 also fell short.
Analysts noted that some of Verizon’s postpaid phone additions may have come from cable company defectors rather than wins against AT&T or T-Mobile directly.
Who Is Dan Schulman?
Dan Schulman is not a career telecom executive. He is the former CEO of PayPal, the digital payments company he led from 2014 through 2023 and helped transform from an eBay spinoff into a global financial platform.
He was serving on Verizon’s board as its lead independent director when the company decided to replace Vestberg, and by his own account he was not eager to take the job.
He agreed when he assessed the competitive situation and concluded that the company’s decline relative to T-Mobile and AT&T was solvable, but only if someone was willing to make genuinely uncomfortable changes rather than incremental adjustments.
He has since made clear that he views incremental adjustments as precisely the wrong approach.
The layoffs of more than 13,000 employees in November 2025 were the first signal that Schulman’s changes would be substantive.
The decision to end free line and free handset offers, the promotional tools that every wireless carrier has relied on for years, is the second major signal.
It is the kind of move that produces short-term pressure in subscriber counts against competitors who are still offering those deals and that requires confidence in the alternative strategy to sustain.
Schulman’s alternative strategy has two pillars. The first is micro-segmentation, actually diagnosing what each customer needs rather than applying a blanket promotional response to every retention risk.
The femtocell example is the prototype. If a customer has a service problem, solve the service problem.
If a customer wants more data, offer more data. If a customer is price sensitive, address the price. Stop spending $1,000 to give everyone a phone that does not address their actual issue.
The second pillar is artificial intelligence. Verizon is currently resolving 85 percent of customer problems using AI.
The company is working with Anthropic and Google to further develop its AI capabilities for network improvement and customer service.
Schulman has described his vision as transforming Verizon into an “AI-first company,” using AI to provide faster, more accurate customer support while simultaneously cutting the operational costs that have weighed on the company’s margins.
What Comes Next?
Schulman’s Q1 results represent a first quarter of positive postpaid additions after years of losses, but the competitive landscape has not softened.
AT&T added 294,000 net postpaid phone customers in Q1, more than five times Verizon’s total. T-Mobile is shifting its focus to growing accounts rather than individual lines.
The battle for American wireless subscribers is as intense as it has ever been.
What Verizon is betting is that the path to winning that battle runs through actually serving customers rather than bribing them with hardware.
Free phones brought customers in who stayed for the phone and left when the experience did not improve.
Femtocells and targeted retention keep customers who are satisfied. The CAC declining 35 percent in a single quarter suggests the market is responding, the customers Verizon is adding now cost less to acquire because they were attracted by something more durable than a promotion.
“Our turnaround is not only progressing, it is gaining momentum,” Schulman said. “We are beginning to reclaim our market leadership by putting the customer at the center of everything we do.”
The era of the free handset is over. The era of earning customer loyalty by solving customer problems is apparently what comes next.
Verizon need to get Rid of all of their Non Corporate Stores…ASAP
Because the owners are very nasty to you as a Customer and that is not The Verizon
Vision at all..Im a 28 yrs Disabled Veteran Of the United States…Im also tired of calling to speak with a non English speaking Representative…When I ask to be transferred to an American Speaking Rep…They get very smart and angry with me…Im so dam tired of this kind of treatment…Im just about ready to leave Verizon and go to AT&T..Or Who Ever…The Next that a Non Speaking Representative talk to me just like I’m a Child…I am Going to Cussed their Asses…Out so bad…The Next Will Be An 1965 Ass Chewing Out…
[…] earnings call, Schulman announced that Verizon is phasing out free line and handset promotions. ArtVoice recently reported that the CEO is under massive fire for taking away these free offers. His justification? He says it […]