Verizon will drop phone contracts, end discounted phones

(AP) — Verizon, the nation's largest wireless
provider, will stop offering phones at discounted prices
when customers sign two-year service contracts.
The move was made in the name of simplification, but it
could result in some customers paying more.
All wireless carriers have been trying to wean customers
off subsidies, in which a $649 iPhone 6 goes for $200
with a two-year contract. Instead, carriers have been
encouraging people to buy phones outright by paying
the full retail price in monthly installments. A few
carriers, namely Sprint, also offer leasing options for a
lower monthly fee, but the customer doesn't get to keep
and resell the phone without additional payments.
Verizon is the second national carrier, after T-Mobile, to
end subsidies entirely for new customers.
Existing customers will be able to keep current plans.
Verizon says there will be restrictions, but it didn't
elaborate. For instance, it wasn't immediately clear
whether customers keeping the current plan will still
qualify for subsidized phones.
Under the new plans, which take effect Aug. 13, prices
for voice, text and data services will drop by roughly $
20 per month compared with subsidized plans. But
customers will no longer get the subsidies on the
phone, valued at about $19 for an iPhone 6. But there
are variations, so some will pay a bit more, others a bit
less.
Verizon is also streamlining its data plans to four main
options, ranging from "small" at 1 gigabyte to "x-large"
at 12 gigabytes, all sharable under family plans. Verizon
currently has 15 options ranging from 0.5 gigabyte to
100 gigabytes. Two gigabytes is plenty for most single-
line customers, though a few hours of streaming video
could eat that up.
Customers will no longer have two-year commitments,
but they might be stuck with Verizon for two years
anyway as monthly installments for the phone stretch
over that time.
Here's a look at how the changes affect various
customers. These monthly prices are for unlimited
calling and texts and a set amount of sharable data. The
phone costs extra.
___
INDIVIDUALS:
Those with contracts paid $60 a month for 1 gigabyte of
data and $90 for 3 gigabytes. Subtract the $19 worth of
subsidies on the iPhone 6, and the monthly cost was $
41 for 1 gigabyte and $71 for 3 gigabytes.
Those who were already buying their own phones paid $
45 for 1 gigabyte and $75 for 3 gigabytes.
Under the new plans, customers will pay $50 for 1
gigabyte (a price increase for both groups) and $65 for 3
gigabytes (a price cut). The 2 gigabyte plan is being
discontinued, so customers will have to choose more or
less.
___
COUPLES:
For two lines, couples paid $130 a month for 3 gigabytes
and $150 for 6 gigabytes under subsidized plans.
Subtract the value of the subsidies ($38 for two
iPhones), and you got $92 for 3 gigabytes and $112 for 6
gigabytes.
Couples who bought or brought their own phones paid $
100 for either 3 gigabytes or 6 gigabytes, thanks to
steeper discounts Verizon had offered to customers who
declined subsidies and chose larger data plans.
Under the new plans, that couple will pay $85 for 3
gigabytes (a price cut) and $100 for 6 gigabytes (a price
decrease from subsidized rates, but no change for
others).
___
FAMILY OF FOUR:
Four lines sharing 10 gigabytes cost $240 a month under
subsidized plans, or $165 after subtracting the $75 value
of subsidies on four iPhones. Those who weren't on
subsidized plans paid $140 a month.
There will no longer be a 10 gigabyte option. A new 12-
gigabyte plan will cost $160. So that's a price cut for
those on subsidized plans and an increase for others
(but those customers are also getting more data to
share).