Verizon eliminates subsidies, contracts in effort to simplify phone plans

While the new packages are easier to follow, they won't necessarily save you money when they take effect August 13.

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When Verizon’s geese come home to roost, they’re going to find a whole different set of smartphone plans.

Big Red is eliminating subsidies, service contracts, and building its plans around a fixed cost for unlimited talk and text with data usage on top, an industry trend largely pushed by T-Mobile.

Why this matters: As the nation’s largest carrier, what Verizon does impacts not just its customers but the entire industry. The American carrier landscape continues to move in the direction of no contracts and easier-to-understand plans. The days of subsidized smartphones are surely numbered.

Four plans to choose from

Customers will pay $20 per month for each smartphone line to get unlimited talk and text, and then choose among four different data packages. There are no separate "family plans" anymore: just buy as many lines as you need, and buy data for them to share.

The smallest option, with one gigabyte of data, is $30 per month. One step up is 3GB a month for $45. Finally, you can go bigger with 6GB for $60 and 12GB for $80. Unfortunately Verizon is keeping its penalties, so you’ll get dinged $15 per additional GB. This data is shared among all the lines on your plan.

Another downside is Verizon is dropping its 500MB plan, which was $20 per month and a good option for someone who wanted data access but didn’t use a ton. Frankly, it should have just replaced the 500MB plan with 1GB, and kept the price.

The other major change is the elimination of smartphone subsidies, something that AT&T, Sprint, T-Mobile, and other smaller carriers have embraced. Typically, carriers would offer a smartphone at a substantial discount in exchange for a two-year contract. 

While the good news is you’re not stuck with a contract, you’ll need to pay full cost for a smartphone. In order to avoid sticker shock, you can pay for the cost of the phone in monthly installments.

Typically, phones that are sold unlocked and direct to consumers are GSM phones, and don't always work on Verizon's CDMA network. With Verizon's switch away from lock-in subsidized phone contracts, we might start seeing more unlocked CDMA phone models.

This story, "Verizon eliminates subsidies, contracts in effort to simplify phone plans" was originally published by Greenbot.

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