Verizon offering no-contract plans, still making more money…

Posted on: September 23, 2008 at 11:58 pm | Posted under: Technology
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Verizon Wireless has announced that customers can get a plan without a one or two year contract locking them down.  The only caveat, you have to pay full price for the phone.  While I think this is a great move for Verizon to give more flexibility to their customers, how many people are actually going to pay full retail price for a new phone or device just to avoid a contract.

The reason why users are signed up for a contract is because the carrier subsidises the cost of the phone and the up-front savings are actually applied to the cost of the phone over the life of the contract.  So, I think Verizon is being a little unfair here.  If I am going to pay full retail for a phone up-front, then I want a reduced monthly cost, because there is no subsidy to make up since I am paying full retail.  Verizon is making out better with this no contract offering.  Full phone costs up-front and still charging the same monthly rate.  Yes, they may end up losing customer or two since contracts are not locking them down – but they are making even more money now.

I am still undecided at this point if I will switch to a no-contract plan when my current contract ends, I guess we will see if Verizon launches some new phones that are worth using between now and May 2009.

What are your thoughts on the new Verizon Wireless plan?

Cheers!

4 Comments »
  • http://twitter.com/tankilo tankilo

    You hit the nail on the head. I’m sure the reasoning is contract customers are a more “secure” form of income and less risky, or something like that. But I’d like to be rewarded for buying a SIM card, setting up service, changing anything I want through the website, and then you never hearing from me again.
    Also, I imagine the no-contract “I brought my own phone/paid full price” people like the service more, because they don’t feel obligated and probably value their phone a little more.
    With the GSM carriers, I don’t even have to buy the phone from them, I can pick it up from anywhere that sells unlocked phones (assuming it’s got the right bands) 1900 here in Phoenix but get an 850/1900 just to be safe.

  • http://twitter.com/tankilo tankilo

    You hit the nail on the head. I’m sure the reasoning is contract customers are a more “secure” form of income and less risky, or something like that. But I’d like to be rewarded for buying a SIM card, setting up service, changing anything I want through the website, and then you never hearing from me again.
    Also, I imagine the no-contract “I brought my own phone/paid full price” people like the service more, because they don’t feel obligated and probably value their phone a little more.
    With the GSM carriers, I don’t even have to buy the phone from them, I can pick it up from anywhere that sells unlocked phones (assuming it’s got the right bands) 1900 here in Phoenix but get an 850/1900 just to be safe.

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