Verizon dumps service contracts

It seems that open-ended customer relationships are gaining a strong foothold, as Verizon joins other carrier networks in scrapping its two-year contract plans for customers.

Verizon will let you keep your current plan indefinitely, but once you leave it, you likely won’t be able to switch back. Verizon will now allow the users themselves to pick their preferred data plans based on usage, and they can choose from the smallest 1-GB data plan for $30 a month, or the extra-large data plan for $80. At the outset, you’ll pay more on Verizon’s new plans than you would have with a two-year contract.

While there are situations where customers get to keep their current plans, upgrade to new phones at a discounted rate, and sign a new contract, unlimited data users can not. Still, the old two-year contracts would have made you pay a $200 down payment and a $40 activation fee – neither of which you need to pay using Verizon’s new plans. For example, if you’re due for an upgrade soon you still qualify for phone discounts. So Verizon’s new plans will still be cheaper in the long run.

If your company pays for all or part of your phone service, but not the phone itself, the new plans will hurt.

You might want to game the system for another two years by getting a discounted phone now. For 3 gigabytes, you’re now paying $71 after subtracting the subsidy.

If you want to take advantage of the new pricing, log into your account tomorrow to switch or visit your local AT&T store. That’s an average of $8 a month.

A 6 GB plan will save you $3 a month on your monthly bill. Without the upfront costs, you’ll save $550 ($3050 vs. $3600) over two years, for an average savings of $23 a month. Now, customers will now how much they are really paying for and what exactly they paying for. So you’re still stuck with Verizon. And you’ll definitely be saving something – potentially a lot, if you play your cards right.