Monthly Archives: September 2015

Contract Balks: The End of Cell Plans May Eat into VOIP Business

A few weeks ago, Verizon bid farewell to the two year contract, once a staple in the cell phone community that is now cast aside.
Following in the footsteps of Verizon, Sprint also is ditching the two year deal as well, now leaving just AT&T as the only major carrier that still offers some sort of term with cell phone contractual plan.

T Mobile, a distant third to AT&T and Verizon as it relates to how they’re ranked in terms of revenue, dumped the two year plan years ago, which isn’t surprising considering that T Mobile is always seemingly a step ahead of the competitors in terms of knowing what customers want, although that hasn’t changed their ranking or standing within the cell phone community.
When T Mobile said so long to two year deals, it was news.

Verizon and Sprint doing is hardly qualifies as that.

Quite frankly, the two year deal was dead and buried years ago when T Mobile chucked it. The entire concept of a contract for a phone makes sense given that everyone needs a cell phone and they’ll easily compromise their consumer integrity by signing on for something that they’ll have to pay, even if contracts aren’t something you’d really ever consider.

Which makes it even more apparent that you don’t need a contract, as the phone business has migrated into collecting more money for the phone and assuming people aren’t going to cancel. The additional income from the phone simply means that you can lease a phone for 12, 18 or 24 months, and pay a nominal fee each month for it, but you are on the hook for all the payments, unless you want to buy out the phone itself.

So essentially, the contract and the phone have switched places. Consumers are told that there is no “contract” per say for the plan; now they are contracted to pay for the phone. Of course, they can buy it outright but who is going to drop hundreds when you can pay $20 or $30 per month?

As AT&T mulls over its next move, the announcement of the No. 2 cell phone provider to dump their contracts is about as anti climatic as you can get. AT&T already offers leased phone options, so the decision to say so long to the two year plan is somewhat of a moot point.

Eventually it will happen, but to call it news is hardly accurate.

So, what does this all mean for VOIP? Scooter Simonds, of Southlake Texas runs a small business that has relied heavily on VOIP services. With high employee turnover, Scooter says he kept his VOIP service because he didn’t want to keep replacing employee cell phones. “Now, I’m considering ditching the VoIP service and just getting each employee their own cell line”. If the employee is replaced, he is not stuck with the remainder of their 2 year commitment.

Of course, there are other benefits to VOIP so time will tell.