Verizon CEO Lowell McAdam has admitted that Verizon Wireless could easily begin offering a no-contract structure but only if customers ask for it. McAdam was speaking at a New York City event this week when he admitted that T-Mobile trying out new pricing structures was an exciting time for the US mobile industry.
McAdam calls the move to a no-contract structure “pretty easy” to complete.
According to McAdam, “I’m happy when I see something different tried. We can react quickly to consumers’ shifting needs.”
T-Mobile several weeks ago announced that it would attempt to disrupt the US wireless industry by offering off-contract plans that encourage customers to bring their own unlocked smartphones to the network.
The non-subsidized phone pricing model is not a new concept. European customers often pay full price for their smartphones while receiving lower priced mobile phone plans on a month-by-month basis.
Under T-Mobile’s plan, customers pay more for the first 20 months after buying their devices and then pricing goes down further.
As a consumer, don’t be fooled by Verizon’s expected willingness to help customers. The network could actually earn more money if it can convince customers to go off contract. Currently Verizon, AT&T Wireless, Sprint Wireless, and other carriers are losing hundreds of millions of dollars each year as they subsidize a customers iOS, Android, or Windows Phone smartphones. Wireless carriers earn back subsidization costs over the period of a two year contract by charging higher contract prices.
Are you a Verizon Wireless customer? Would you stick with the network if you had to pay $500-$600 for your next iPhone while receiving lower wireless carrier costs?
