Feature Article

April 18, 2013

Verizon May Follow T-Mobile's Lead and Abandon Contracts

T-Mobile has been hyping its new "Un-carrier" plans pretty heavily, largely by taking jabs at other major wireless carriers in the U.S. Indeed, much of T-Mobile's advertising has revolved around the premise that smartphone contracts should be eliminated, while purposely drawing comparisons with Sprint, AT&T and Verizon.

Interestingly, one of T-Mobile's targets, namely Verizon, may be ready to tackle this challenge and adopt a similar "Un-carrier" approach to subsidizing devices.

T-Mobile's plans offer affordable rates for unlimited talk, text and data usage, but more importantly, they eliminate contracts and traditional smartphone subsidization, while still lowering the upfront cost of devices for customers. Instead, the carrier allows customers to pay off the total price of their smartphone in monthly installments.

While this method has been criticized as not really being all that different from signing a two-year contract, it does offer one distinct advantage: once the phone is paid off, the customer's monthly costs go down.

The elimination of contracts also makes it much easier to switch carriers; simply pay off your device's balance and you can leave.

These changes may not be drastic enough for some, but for customers fed up with the contract system, these changes are huge. Verizon customers in particular have responded strongly, starting an online petition that urges the carrier to move away from the traditional contract system to create a "more affordable way for consumers to purchase their devices."

As of this morning, this petition received just under 80,000 signatures after only 11 days.

The petition was started by blogger and Verizon customer Mike Beauchamp in response to comments from Verizon CEO Lowell McAdam who said he would give "genuine thought" to eliminating standard contracts, if there was enough customer interest.

Given the response to Beauchamp's petition, McAdam may have to do more than just think about making a change. It doesn't hurt that T-Mobile's Un-carrier plans have been a rousing success so far.

Edited by Braden Becker

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