Verizon recently announced that it will be dumping its one year contract option.  Why?  Huff Post tells us Verizon claims there is not enough customer demand to justify the service - - that customers prefer two year contracts to take advantage of promotional pricing. 

It is common knowledge that carriers can sell these $600 phones for a penny because they recoup the cost via locking you into an extended contract.  One year plans would often require a higher initial phone cost because the carrier won’t be able to recoup their losses to the same extent.

So it’s all the same for consumers, right?  Not really.  Cell phone contracts are notoriously unfriendly to consumers - - even calling it a contract is a bit of a misnomer.  The carrier can change the terms or rates at any time and leave you with a phone that probably isn’t compatible with other carriers.  But if YOU want to change the terms of the contract?  You’re up a creek without a paddle and stuck with an early termination fee upwards of $300.

It’s difficult to say if Verizon’s numbers are true, but it seems a tad bit suspicious to me.  If consumers don’t see the benefit in one year contracts, consumer advocates certainly do.  When Germany’s economic minister Rainer Bruederle proposed pro-consumer changes to telecom laws, he focused on contract terms.  In fact, he proposed a ban on two year contracts and suggested all service contracts last a maximum of twelve months.  U.S. regulators have paid a lot of lip service to ETFs and two year contracts but haven’t made any substantial moves in regards to contract lengths.

So now you’ve lost your option for a one year contract with Verizon.  But at least you can get your device at a huge discount with your two year contract now, right?  Wrong.  In January, Verizon axed their “New Every Two” program that allowed you to upgrade your phone every two years.  So they’ll still be charging you the high monthly fees associated with recouping the phone cost … except there’s no phone cost to recoup, so it’s just pure profit for them.  Very sneaky, Verizon.

There are rumors that Verizon will be offering a $50/month month to month plan with unlimited calls and text with an additional $30/month for data.  This would be an excellent option for those of us ready to loose ourselves from the shackles of oppressive phone contracts, but as of now they are still rumors.  In fact, Verizon purposefully leaked the information to DroidLife the day after they announced the end of their one year contracts.  It’s hard to tell if they are serious or if it was a PR move to soften the blowback from canceling the one year contracts.  Only time will tell.