For quite a while, plenty of people have been touting the benefits of going off contract and buying smartphones outright, including here at Pocketables. Recently, T-Mobile, who is already the most no-contract-friendly carrier, announced that it would soon stop offering subsidized handsets altogether. Now, although no one really expected it, Verizon Chief Executive Lowell McAdam has made comments suggesting that Verizon might move in the same direction.
According to the Wall Street Journal, McAdam said that T-Mobile’s change “is a great thing,” but noted that the main problem with eliminating subsidies is getting customers to pay the higher up front cost for unsubsidized devices. If this weren’t the case, he says that Verizon “could move to that very quickly.” AT&T too seems to be joining the no-contract bandwagon, as AT&T Chief Executive Ralph de la Vega said that the company will be keeping an eye on T-Mobile’s strategy, and may consider switching if it works well. However, he too cited the problem of up front costs driving users away, which is a very legitimate concern.
Still, I’m hopeful that T-Mobile will succeed with its new business model, and cause the other larger carriers to follow suit. I’ve already expressed my support for off contract smartphones, and am actually quite hopeful that AT&T or Verizon might actually make the switch. Before their switch to a no contract model, T-Mobile’s Chief Marketing Officer made some similar (if more outspoken) statements to those made by AT&T and Verizon’s executives. I can only assume, then, that this may be a sign of both carrier’s future directions.
Well, if Verizon does this, that will pretty much be the end of phone subsidies in this country, as everyone always ends up following in Verizon’s and/or AT&T’s footsteps. And in this case, that’s not necessarily a bad thing, especially if consumers end up paying less. Carriers have been complaining for years that subsidies are killing them, so hopefully this will allow them to eliminate that cost and focus more money on their networks and customer service.