Verizon is the latest wireless carrier to abandon contracts, announcing that it no longer offers long-term service contracts and phone subsidies to customers. This change means customers now pay a monthly access fee for each phone on their account, and choose a data package that best fits their needs. The cost of any new wireless device will also be split across a 24-month period.
While many carriers have opted to switch over gradually, Verizon has done it all at once. If you are currently under contract, you won’t see any immediate change. You also don’t have to change to the new plans, but you will in some cases save money depending on how your plan is structured.
Why are Verizon and other carriers ditching contracts? It comes down to money, of course. Wireless carriers were shelling out a lot of money to subsidize the cost of offering phones at a reasonable price. By passing the full cost of the phone onto the consumer, they no longer need to worry about that since you’re paying for the device in full.
Here’s another way to look at it: Instead of walking into your local wireless store and dropping $200 or more on a new device, you now get that same device with no money down. The carriers also bank on the hope that you might go for a more expensive device now that you don’t have to pay for it up front.
Here’s what you need to know about the new changes.
How do the plans change?
Each device is now charged an access fee for unlimited talk and texting under the new plan. The fee is $20 per month for smartphones, $10 per month for the company’s Wi-Fi enabled Jetpack hotspots, and $5 monthly for basic connected devices like smart watches.
Depending on your current wireless plan, you were either paying $25 or $40 per month for a smartphone access fee, with that cheaper monthly rate for those with data plans above 4GB. However, for those with family plans, the $20 charge represents a $5 increase per month over the old $15 monthly access charge.
What are the new data plans?
Verizon is focusing its plans around the data package, limiting the number of basic plans to just four versus nearly a dozen before. Four data options are available, “Small,” “Medium,” “Large,” and “Extra Large.” Users get 1GB of data with the Small plan for $30 per month, 3GB with Medium for $45 monthly, 6GB with the Large plan for $60 per month, and finally $80 per month for the Extra Large plan with 12GB of data.
Larger buckets are available by talking to a customer service representative, but in any case those going over their plans will be charged $15 per GB. The new plans bring Verizon’s offerings in line with most of its competitors.
AT&T offers 1GB for $25 per month, 3GB for $40, 6GB for $70, and 10GB for $100 (although new Mobile Share Plans give 2GB for $30, 5GB for $50, and 15GB for $100). Sprint is the cheapest on the low end at $20 monthly for 1GB, but charges $40 for 4GB, $70 for 8GB, and $100 for 10GB.
T-Mobile is a little harder to compare as it blends one line of access into its plan offerings. T-Mobile’s basic plan with 1GB would cost the same as Verizon at $50 per month, although comes in $5 cheaper per month for 3GB of data, and $10 cheaper for the 5GB plan than Verizon’s “Large” data option. T-Mobile also offers unlimited data for $80 per month, which no other carrier currently offers.
Comparing the big four carriers, Verizon at the moment is a solid option for data-heavy users, but still comes up short against T-Mobile’s unlimited plan, which still is the best overall deal in the industry.
Do I lose my upgrade?
Yes and no. Verizon customers who stay with their contract-based plans will still get the same $200 voucher on a phone they’ve always gotten every two years to apply towards the price of a new phone. However, if a customer chooses to change to the new plan, they will be subject to the new policies surrounding upgrading.
A new device is now paid in equal installments over a 24-month period with any new phone purchased under the new plans. If you want to upgrade early, you must pay off of the current device in full before being able to upgrade. This is different from the way other carriers are doing it — like T-Mobile and AT&T — where the customer can choose to upgrade to a new device after a set period by trading their old device in.
Verizon has no offering like this, which might be frustrating to some. There appears to be no trade-in program either, but the company will no longer charge any kind of upgrade fee, which many carriers still do, such as AT&T.
Can I leave anytime now?
You have no service contract at all with Verizon, and are free to leave at any time. While this might seem appealing, there’s still a catch. You are still on the hook after leaving the carrier for the remaining payments on the device, which will be due in full with your final bill.
Also keep in mind that Verizon’s technology prevents you from using your device on most other carriers. If you’re switching to AT&T or T-Mobile, you’ll need to buy a new device. Some devices may also not work on Sprint’s network either, so be sure before you switch that you know of your new carrier’s compatibility with your Verizon device. Some may take your old Verizon phone and/or help you pay off the installment charges to ease the switch.
Whatever you decide to do, make sure your new plan fits your mobile lifestyle. Don’t shortchange yourself when it comes to mobile data, as you may end up paying far more in the end through overage charges. With Verizon’s new plans and associated charges much more data-focused, taking stock of your needs — especially data wise — will be very important.
Follow Ed on Twitter @edoswald