Verizon Wireless is offering cell phone subscribers the chance to go month-to-month with their cell phone service without signing a pesky contract.
The second largest wireless operator in the U.S. announced Monday that it will offer month-to-month service for all its current wireless plans. Monthly subscribers will pay the same rates as those with long-term contracts, but month-to-month customers won't be required to sign contracts.
This means that month-to-month customers won't have to pay an early termination fee if they decide to quit Verizon's service and go elsewhere. In exchange for not being bound to a contract, customers will have to pay full retail price for their Verizon phone. The other option is for customers to use their existing Verizon phone or buy a pre-owned Verizon phone. Existing Verizon Wireless customers can switch to monthly plans after completing their current contracts.
The move to offer month-to-month service comes as mobile operators face pressure from customers, Congress, and the Federal Communications Commission to open up their networks and loosen contract terms.
Earlier this year, Verizon Wireless settled a class action lawsuit in California over early termination fees. The FCC and federal lawmakers have also been putting pressure on wireless operators to reduce the cost or even do away with early termination fees. All four of the major wireless operators are now offering pro-rated contracts, which reduce the cost of early termination fees over time.
Wireless operators have long argued that early termination fees are necessary to help them recoup the cost of subsidizing handsets. For example, Verizon offers the new LG Chocolate for free with a two-year contract. But without that subsidy it will charge customers about $300 for the phone.
Other carriers have also started offering month-to-month service. T-Mobile offers a similar service plan called "FlexPay." Sprint Nextel's no-contract option offers customers 200 minutes of talk time, plus nights and weekends for $39.99 per month. The plan works with all phones except the Instinct and other PDAs and includes 200 minutes, unlimited night and weekend minutes starting at 9 p.m., and nationwide long distance. AT&T offers a month-to-month plan, but it isn't available for all their phones.