After a gradual shift over the past number of years away from two-year contracts, today Verizon has announced plans to completely eliminate the two-year contract and, in its place, the company is now pushing installment plans. Two-year contracts were previously the main source of income for large carriers such as Verizon, due to the discounts that they offered customers when purchasing devices, as well as the fact that they locked customers into remaining at the carrier for two years. Since the introduction of installment plans by T-Mobile, though, carriers have slowly adopted the new format and today's move only proves their popularity.
Now, Verizon has not offered any form of two-year contracts to new customers since August 2015, but, until today, existing customers were still able to sign up for two-year contracts. Today, though, existing customers will have two options once their contract expires. The first, and perhaps most people's preference, is the ability to choose an installment plan, by which customers are free to choose a new device and will agree to a fixed installment fee each month over the course of either one, two or three years. This way, a customer's device is separated from their mobile plan, allowing them to switch freely between plans as well as carriers, unlike with two-year contracts.
Aside from this option, though, the company will also be giving customers the option to purchase devices outright with one payment. Another detail is the fact that Verizon has decided to raise the activation and upgrade fee to $30, though it has not confirmed the reasoning behind this. The fee, which has to be paid every time a customer purchased a new phone through an installment plan or outright, had previously sat at $20. Considering T-Mobile is removing all carrier charges and taxes from its T-Mobile One plan, though, it's an unlikely move from the company and something that is sure to disappoint a number of its customers. With Verizon's discontinuation of two-year contracts becoming effective immediately, Sprint is the only major carrier that still offers the contracts. With their focus on installment plans it's likely only a matter of time before the carrier follows suit and discontinues the unpopular contracts too. It'll remain to be seen if the complete removal of two-year contracts will affect Verizon's sales much but, with the removal of two-year contracts for new customers not having much of an impact on the company's profits, this move will likely not make much difference to the company's bottom line.