A great incentive to buy lots of Verizon Wireless phones is about to go away.
Verizon confirmed to Boy Genius Report that after April 17, the carrier will discontinue its one-year contract option for all phones. Customers will have to either get two-year contracts or pay full price for phones in exchange for month-to-month service.
The one-year contract was a valuable option for people who like to own the latest gadgets, costing $70 more than a two-year contract. Full-priced phones, by comparison, usually cost $300 to $400 more than the two-year subsidized price.
As you might expect, Verizon’s explanation is pure PR spin: “The reason behind the change is the greater majority of customers sign up for a two-year contract and take advantage of the discounted (promotion) price,” a company representative told BGR. Translation: Verizon has to subsidize every phone that’s bought on contract, so it’s in the company’s financial interest for customers to buy fewer phones. Most people don’t choose one-year contracts, so Verizon can eliminate the option without much of an uproar.
Earlier this week, AT&T revealed plans to push more customers toward two-year contracts. The carrier raised the full price of all smartphones by $50, and one-year contract prices by $150. Already, the carrier hides the one-year contract option from its website, forcing customers to ask for it in stores.
Verizon’s policy change will have no affect on the iPhone 4, which was never offered with a one-year contract.