Verizon has paved the path for a radical change in how customers from now on, will pay for their wireless carrier services. The company is now moving away from the long-running services and subsidies based contracts with the introduction of a new set of plans.
The new plans, will go into effect starting August 13 were introduced by Verizon Wireless on Friday, now requires customers to pay upfront for their smartphones or pay for them in monthly installments. Plans now start at $30 per month for 1GB of data, the ‘Medium’ bucket gets 3GB of data for $45, in ‘Large’ we have 6GB of data for $60 and finally the ‘X-Large’ bucket which includes 12GB of data for $80. Under the new system, there won’t be any single line options or family plans, though users will still be allowed to share data among other devices and accounts. Moreover, from now on there won’t be any contracts, customers will be allowed to switch plans each month.
Users will need to pay an access fees, depending on what type of device they’d want to use. For instance, smartphone would cost $20, a tablet or a jetpack Wi-Fi hotspot would cost $10 while it’ll cost $5 for a connected device like a smartwatch. Hence, to buy a phone users can either pay for the full price or pay a monthly installation plan fee.
It’ll be interesting to see customer’s reactions about these new plans, especially given the long duration of time customers on various wireless carrier services in the US paid a monthly fees that covered for their phone subsidies and services. Verizon believes that by eliminating the options of a contract, it is making things rather simpler for customers along with focusing on four other options.
The introduction of these plans will certainly shake things up for Verizon, which apparently still has the most customers on a service contract out of the big four national carriers. Customers used to find contracts attractive because it gave them the assumption that they are actually paying less for a smartphone. For instance, they could sign a contract and get a brand new iPhone 6 for $200, which otherwise they would have to pay $650. However, this implies that carriers have increasingly placed the burden of the cost of a device directly onto the consumer during the contract period.
Apart from Verizon, AT&T is also moving away from contracts and has asked its retails partners like Apple and BestBuy to only offer monthly installment plan for devices, a move away from contracts.