Month to month contracts at Verizon may ignite new mobile paradigm

September 22, 2008

Month to month contracts at Verizon may ignite new mobile paradigm Lots of people have trouble with commitment, and when it comes to a 2-year contract with a mobile phone company, can you blame them? It looks like Verizon is busting open the iron cuffs, it just a new set month to month service contracts and network compatibility with any CDMA enabled phone.

That’s great news for people who already own a CDMA phone (mostly distributed by Sprint and Verizon) and want to sign up for month to month service. It’s also a sign that mobile phones are continuing to transition toward utility status, just like electricity and previously ubiquitous land line service.

In a company press release, Verizon says:

Verizon Wireless’ new Month-to-Month agreement gives customers the freedom to purchase new devices at full-retail price, or use their own CDMA devices without the commitment of a one- or two-year contract. Additionally customers can terminate their agreement at the end of any month without paying an Early Termination Fee.

The flip side of the deal? Anyone without a CDMA phone will have to pay full retail prices for the phones. For example an LG Chocolate in Back Cherry costs about $300 in a month to month contract and $100 in a 2 year contract. For more expensive phones the difference can be even greater.

While opening up month to month contracts is an overall great thing to do for customers, Verizon may be encouraging the development of third party markets like eBay, Craig’s List, and Amazon to fill in the gap with lower prices for phones.

Other mobile companies are expected to follow suit, and AT&T has announced that it will sell the 16GB iPhone without a contract for $700.

Of course, every carrier is watching to see what happens as phones powered by Google Android begin to enter the marketplace with a completely open source foundation. The pressure is on to deliver what customers want like never before.

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