Verizon open to eliminating contracts, will monitor T-Mobile's success

By on April 4, 2013, 7:30 AM

T-Mobile’s announcement and launch of a contract-free $50 unlimited talk and text plan last week certainly seems like a sweet deal but it may have further reaching implications than any of us are aware of. I say that because Verizon CEO Lowell McAdam teased the idea of getting rid contacts during a recent company event.

The executive told reporters that it would be pretty easy to change their business model to eliminate contracts. He was quoted as saying he was happy to see something different tried. McAdam said he would monitor customer response of T-Mobile’s decision, noting that Verizon could react quickly to customers’ shifting needs. It certainly sounds like he would be willing to switch to a similar model if it proves successful.

It’s an idea that isn’t totally new as AT&T CEO Randall Stephenson said back in January he had thought about having customers pay for their phones up front in exchange for a lower service rate. No word yet on just how serious he was about this or if he has revisited the idea since T-Mobile’s announcement.

If you didn’t catch T-Mobile’s announcement last week, they are doing away with contracts in an attempt to be more transparent. Moving forward, customers will pay a small fee up front for a handset then an even smaller amount each month until the phone is paid for. The company still needs to work on educating customers, however, as feedback has been mixed thus far.




User Comments: 6

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MilwaukeeMike said:

T-mobile's plan doesn't look so great because it doesn't have a contract, it's also much cheaper.

Verizon new plan $200 down $100/month 2GB data/month - 2 year contract. Overage charges on data.

T-Mobile - New plan $100 down, $60/month 2GB/month + $20/month for the phone. - No contract. No Overage charges on data

Two years later with Verizon you've paid a total of $2600 you will continue to pay $100/month. Two years later with T-mobile, you would have paid $2020 and your bill will now go DOWN by $20/month because your phone is paid off.

Verizon has a lot more 4G, that's the only real benefit I see right now. If I were Verizon, I'd expect to see my new customer sign-ups to slow down too.

Guest said:

This would be great if they grandfather in current users

Guest said:

T-Mobile has had lower cost contract free versions of their plans for years for people that owned their own phone. The Equipment Installment Plan (EIP) and complete abolition of the contract version of plans are what is new. Removing the option of a standard contract forced better media coverage of what they've had all along. This is the only business model that makes sense for consumers, so everyone can thank T-Mobile when Verizon and AT&T follow suit.

3DCGMODELER 3DCGMODELER said:

Me going to switch to Verizon...

veLa veLa said:

I don't care unless they also offer unlimited data like T-Mobile.

Guest said:

My Samung Galaxy on Virgin Mobile...279.00 plus 37.42 a month after taxes. That's 898.08 for two years plus the 279.00 equals 1177.08... now thats priceless.

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