Verizon is Eliminating Long-Term Contracts - Can You Afford the Change?
August 24, 2015
By Susan J. Campbell
TMCnet Contributing Editor
As a rule, consumers don’t generally like to be tied to contracts. They like to test things out, determine their level of interest and even then, only agree to things in the short-term.Even with this resistance, mobile service providers found an excellent way to use call accounting to ensure ongoing revenue. The consumer who didn’t like the long-term contract liked the price of buying the mobile phone outright even less.
Now it seems that mobile service providers like Verizon (News - Alert) are listening to the resistance of the commitment-phobic consumer and eliminating contracts. The subsidies that kept the price of the phones at a lower cost are going away as well. If you’re in the business of providing phones for your employees, this change applies to corporate accounts as well.
While at first glance, it may appear that call accounting will capture financial benefits in this change, a recent blog by ISI Telemanagement Solutions (News - Alert) suggests that might actually not be the case.
The cost of phone service from Verizon will appear to be lower each month, but if you’re shelling out quite a bit more for the phone upfront, are you really enjoying any savings? The buyer that opts to roll the cost of the phone into a monthly rate plan is still paying the higher amount, just over time.. Therefore, there is still a long-term commitment that requires a signature and a monthly payment.
For the company making the purchase, the same is true. Bulk discounts may be available, but if you want to modify or discontinue the service, you may be looking at additional fees on top of the monthly cost. Insurance charges may be included at this stage as the enterprise has a vested interest in protecting devices. At the same time, users may be more inclined to keep devices longer, especially in the corporate environment. When yearly upgrades are included in the plan, it’s easy to get accustomed to make the change when servers are updated. This new approach will likely lengthen ownership among users everywhere.
This is one area where call accounting should be used to determine whether or not it makes sense to continue with Verizon as an example, or look to a provider with policies more suited to your corporate operations. The point is the industry is changing, and its more important than ever to ask the question: Will this affect your bottom line?
Edited by Stefania Viscusi