Possible AT&T/T-Mobile Deal Already Affecting Consumers Through Verizon’s Discontinuation Of One Year Contracts
As we reported the other day, Verizon is discontinuing its option for customers to purchase one-year contracts. To me this is ominous behavior that will ultimately hurt consumer choice. The change in direction comes on the heels of AT&T announcing that it would acquire T-Mobile and this is an obvious response to that. While there is no guarantee that the deal will pass regulatory hurdles, it’s apparent that Verizon is trying to lock in customers for the long-term as much as possible. By removing the option of a one-year agreement, Verizon assures that any new customers will be locked in with them for the foreseeable future. Don’t get me wrong, it’s a shrewd business move but this is the kind of profit protecting behavior mergers like this will have on the larger mobile industry.
After April 17th, consumers will either have the option of signing either a two-year agreement or going month to month. Verizon says the removal of the option is in response to most people choosing the two year but I don’t really believe that. The bottom line with what Verizon is doing is that they are removing the intermediate option, they either make you lock in for two years or make you go month to month and pay higher premiums and get less benefits. While there are rumors that Verizon is set to unveil a new month-to-month plan that offers unlimited voice and text for $50 a month. That’s nice and all but we haven’t talked about data yet and that will reportedly cost you an additional $30 a month for an unlimited plan. At this point, going month to month you are probably looking at $90 after taxes, how is this somehow and improvement?
The bottom line is that I don’t like this deal one bit and if Verizon gets away with it there will be no reason that AT&T won’t do the same down the road. For these companies it’s all about protecting market-share and profits, consumer choice be damned.
What do you think, is the loss of the one-year contract option not that big a deal or just one more way the consumer is going to keep losing choice and flexibility as further industry consolidation occurs?