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Verizon Ditches 2-Year Contracts And Smartphone Subsidies

verizon wireless

Verizon has announced a major shake-up in the way consumers pay for their wireless service. Starting August 13, all new Verizon plans will require customers to pay for their own phones, either in full or with monthly installments.

It’s a big change in how the wireless company operates and it’s part of a larger shift away from phone subsidies and contracts. The trend, which began with T-Mobile two years ago, has more consumers paying for their own devices in exchange for lower fees.

Verizon spokesman Chuck Hamby was quoted by USA Today as having said that the company is trying to focus on “what customers say matters most to them.”

We’re simplifying the experience of choosing a wireless plan by focusing on what customers say matters most to them. We’re also simplifying the math. These new options provide simple and clear billing, helping make accounts easy to manage and personalize.

Under the new system, Verizon will have no family plans or single-line options. Instead, the wireless service provider will promote four choices with different levels of data — all of which will include unlimited text and voice. A “small” bucket plan will offer 1GB of data for $30 per month; a “medium” bucket will include 3GB of data for $45; a “large” bucket will have 6GB of data for $60; and the “extra-large” bucket will have 12GB of data at $80 a month. Data can be shared among accounts and devices. And with no contracts, customers will be free to switch plans from one month to another.

Along with the data fee, Verizon will still charge an access fee of $20 per month for smartphones, $10 for tablets and “Jetpack” portable hotspots, and $5 for connected devices like smartwatches.

Verizon isn’t alone in shifting away from contracts. CNET reports that AT&T has asked retail partners to only offer service plans with monthly installment agreements for devices instead of the standard two-year contract.

Verizon customers will have two options when buying a smartphone: pay the full retail price in full or make installment payments. This means the days of buying a subsidized phone through Verizon are over. A customer who wants an iPhone 6 will now pay the full $649, not the subsidized $200 price that comes with a two-year agreement.

The LA Times reports that existing customers can keep their current plans. While Verizon mentioned that there will be restrictions, no specific clarification was offered.

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