Monday, September 22, 2008

Verizon Goes Contract-Free...if You're Willing To Go Subsidy-Free

It's a simple concept: let the subscriber pay for the phone, then offer them your services without a contract. Yet major carriers have been slow to pick up on the idea...until recently.

Verizon is the latest (after T-Mobile's well-publicized FlexPay option and AT&T much less-publicized SIM-only service...which I'm still unsure exists) of big-time carriers to offer a contract-free option for their service. You do have to buy or bring your own phone (prices start at $80 for a regular phone and...amazingly enough...$100 for a smartphone) however there's no two-year agreement or early ermination fee if you don't want to stick around that long. It looks as though all plans are still available; the only penalty for no contract (similar to signing a 1-year contract) is the phone pricing...

As an example of pricing, you can get the second-gen LG Chocolate on Verizon for free, the third-gen model for $130, the LG Dare for $200 and the Palm Centro for $100. Prices for a one-year contract are respectively $120, $200, $270 and $170. With no contract, you're in for a shock...the prices of those four models (in the same order) skyrocket to $270, $300, $410 and $350. One one hand, some phones just don't have a ton of price differential ($170 for the Chocolate 3 between a two-year contract and no contract) but others have a larger difference in cost than the early termination fee for a two-year contract. The Palm Centro, Chocolate 2 and LG Date come to mind. On the other hand (said in a good "Fiddler on the Roof" accent) you can get a double handful of phones for less than the two-year ETF, and some o fthem aren't even that wimpy. Of corse, if you really want something inexpensive, you may be able to just grab a phone from Wal-Mart that uses Verizons INPulse brand, then bring it to Verizon's postpaid ervice to activate. Or ask around for someone's old Verizon phone that they discarded when switching to that Apple device whose name I need not mention here.

And yes, the plans available include Verizon's unlimited option, so there's some relevance between this announcement and this blog.

My take: it's good. The high phone prices are expected, and it's no terrible loss to Verizon to give customers another option for using their service, but the moment of this move isn't to be discounted. Note to AT&T and Sprint: when will y'all follow?

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