Wireless carriers are starting to deliver on their yearlong promises of “open access” to gadgets and mobile applications that the carriers don’t sell themselves. One of the first steps: Setting prices for new service offerings, which Verizon Wireless did today.
Verizon, the second-largest U.S. carrier, is now selling “month-to-month” mobile phone service plans that can be used with any mobile phone that uses “CDMA” wireless technology — without requiring subscribers to sign a 2-year contract. This is useful if you’ve somehow acquired a Verizon or Sprint (S) phone, want to sign up for Verizon (VZ) service, and don’t want to sign a long-term contract.
The good news: All of Verizon’s voice and data plans are available on a month-to-month basis at the same price as the long-term contracts.
The bad news: If you don’t already have a mobile phone, and insist on signing up for a month-to-month plan, getting a new phone is going to cost you a bundle. That’s because carriers usually eat much of the cost of your new phone — via a subsidy of up to $300 — as an incentive to get you on a long-term contract. So if you want to use month-to-month service, you’ll have to pay full retail for a phone.
And that’s not cheap. A LG Chocolate — free with a 2-year Verizon Wireless contract — will run you $300. A Palm (PALM) Centro, $99 with a 2-year deal, would cost $350. And a RIM (RIMM) BlackBerry 8830, $150 with subsidy, costs $520 for month-to-month subscribers.
(Side note: Sounds to us like an opportunity for a more robust aftermarket of lightly used CDMA phones. Good news for eBay and Craigslist?)
Expect to pay an even steeper premium when AT&T starts selling no-contract Apple (AAPL) iPhones later this year: This summer, the carrier said an 8-gig, no-contract iPhone would cost $600, and a 16-gig will run $700 — a $400 premium over the subsidized phones, which require a 2-year AT&T (T) contract.
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