The wireless giant is attracting subscribers while device upgrades decline, challenging the idea that carriers need to give away expensive smartphones to grow.

Verizon added 406,000 net postpaid phone connections during the third quarter of 2026, its strongest third-quarter performance in five years. At the same time, customers were upgrading their phones less frequently, contributing to a 9% decline in equipment revenue. Those two developments reveal something important about the wireless business: People still want reliable connectivity, but they are becoming less interested in buying another expensive smartphone to get it.

According to Verizon’s October 26 earnings report, postpaid phone additions increased more than 820% compared with the same quarter last year. The company also gained 137,000 net postpaid accounts, its strongest quarterly account performance in more than a decade. Meanwhile, phone upgrade volumes fell more than 20%, demonstrating that subscriber growth and device sales are no longer moving in the same direction.

More Customers, Fewer Upgrades

For years, wireless carriers used free phones, trade-in credits and aggressive promotional offers to attract subscribers. Verizon is deliberately moving away from that approach, reducing handset subsidies while emphasizing network reliability, simplified plans and customer retention.

The strategy appears to be producing results. Verizon’s overall postpaid phone churn, a measure of how frequently customers leave, improved to 0.94% during the quarter. The company also reported that promotional acquisition costs declined 41% year over year, while retention promotional costs fell 30%. In other words, Verizon is adding connections while spending less on the incentives traditionally used to win and keep customers.

CEO Dan Schulman has argued that competing through expensive handset promotions does little to establish a lasting advantage. Instead, Verizon is betting that customers will value the network and service itself, even without the promise of a heavily subsidized new device.

The Smartphone Upgrade Is Losing Its Urgency

Consumers have reasons of their own to keep existing phones. Modern smartphones remain capable for years, handling everything from mobile banking and video calls to photography and entertainment. For someone already paying a monthly wireless bill, replacing a functional device can feel like an unnecessary expense.

Rising smartphone prices are reinforcing that calculation. Research from Counterpoint indicates that global smartphone shipments declined 20% year over year in the third quarter as memory-chip shortages pushed production costs higher. Consumers are increasingly considering refurbished phones or extending the life of devices they already own.

But Verizon’s numbers suggest that affordability is only part of the explanation. The carrier is actively changing the financial incentives surrounding upgrades. When companies stop making new phones exceptionally cheap through promotions, customers have more reason to evaluate whether they actually need one.

A Business Model Built Around the Connection

Verizon reported $23.5 billion in mobility and broadband service revenue during the quarter, up 2.9% from a year earlier. That growth helped offset declining equipment sales and illustrates why a customer who keeps an older phone can remain valuable to a wireless provider.

The company has also raised its full-year forecast to between 1.1 million and 1.2 million net postpaid phone additions. That outlook suggests Verizon believes it can continue expanding its subscriber base without returning to the costly promotional strategies that previously dominated the wireless market.

There is a financial advantage to this approach. Wireless service generates recurring revenue, while handset promotions require carriers to spend money acquiring or retaining customers. A subscriber who pays consistently, stays with the network and upgrades less frequently can support a more sustainable service business.

For consumers, however, the arrangement creates another question. If carriers are spending less on subsidized devices and customers are keeping phones longer, will those savings translate into better service or lower monthly bills? Schulman has already suggested that Verizon could consider future price increases if the company believes it is delivering additional value.

Verizon’s latest results show that Americans are not necessarily spending less on wireless connectivity. They are separating the service they need from the hardware they may no longer feel compelled to replace. For a telecommunications industry that spent years using new phones to sell monthly plans, that could be a consequential change.