Verizon abandons contracts: Everything you need to know (FAQ)

Confused about Verizon's shake-up of the way you pay for wireless service? CNET has you covered with all of the answers.

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Roger Cheng
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You would have to pay for the Droid Turbo yourself under the new plans. Sarah Tew/CNET

Verizon has made some big changes to how it sells wireless service. But that has also left a lot of questions.

On Friday, Verizon said it would eliminate its long-standing practice of signing customers up for long-term service contracts and offering subsidies to blunt the high cost of smartphones. Instead, it opted for new plans that are slightly cheaper (with some exceptions) but require you to pay for your own device.

It's part of an ongoing shift in the industry in how consumers pay for their service, with more people actually opting to pay for their own smartphones because it can lead to lower monthly charges down the line if you stick with the same device after two years. T-Mobile shed its contracts two years ago, while the other carriers have been gradually moving away.

Verizon, however, opted to rip the bandage off quickly and did away with them in one fell swoop. That may leave some puzzled about how it affects them, which is where CNET comes in. Here are some answers to the most frequently asked questions about Verizon's new plans.

Why is Verizon doing this?

The wireless industry has been steadily heading toward this goal ever since T-Mobile made its splashy announcement two years ago that it would get rid of phone subsidies and service contracts. Verizon had already offered a monthly installment program called Edge.

It's a bit surprising that Verizon was willing to go all-in on the no-contract plan considering it has the largest base of contract customers. Its Edge plans weren't as popular as other rival installment plans, and its base seemed pretty comfortable with their contracts. It just goes to show you, the times are a-changing.

What are the advantages of this plan?

Verizon said it was making these changes for the sake of clarity and simplicity. For the most part, you get four buckets of data to choose from -- a small bucket of 1 gigabyte of data will cost $30, a medium with 3GB will cost $45, a large with 6GB will cost $60 and an extra large with 12GB will cost $80. There's also the device access fee of $20 a month to connect a smartphone. A tablet or Wi-Fi hotspot will cost $10 a month, and a connected device like a smartwatch will cost $5 a month.


Relative to its previous portfolio of family and single plan options, it is simpler. But it's not necessarily cheaper. The $20 smartphone access fee represents a discount to previous users who had to pay a $40 fee under a contract plan, or $25 if you had a 4GB data plan or smaller. But if you had a larger family plan, you previously paid $15 a month for the access fee, so this actually represents a $5 price hike for every line you have.

You do, however, get a bit more data for your money under these new buckets.

Can I keep my existing plan?

Yes, your legacy plans are safe. No matter what plan you have -- a grandfathered unlimited data plan, a prior bucket of data or a previous contract plan -- you will be able to keep it with no changes to the terms. As noted, bigger families with high data buckets and lower device access fees would benefit from keeping their existing plans.

Also, if you switch to one of these new plans, you won't be able to switch back.

I'm on a contract and I have a 'free' upgrade coming up. Do these changes affect my upgrade?

Rest assured, your upgrade is safe. Every two years, Verizon offers existing contract customers the opportunity to upgrade with what is essentially a $200 voucher to spend on whatever new smartphone they want. Customers opting for a more expensive smartphone, like an iPhone 6 Plus or an iPhone 6 with higher storage pay the difference.

Verizon customers on the contract plan will continue to get that perk as long as they stick with their original plan.

So is this the end of contracts for Verizon?

Not exactly. If you don't want to pay the full price of a smartphone upfront (and few do), Verizon will allow you to sign an agreement that says you will pay for your device in 24 monthly installments. That is essentially another contract.

Watch this: Verizon's Go90 free mobile video service mixes YouTube with Hulu

How do the monthly installment plans work?

You take the total cost of the smartphone and divide it by 24 to get your cost each month (excluding taxes). Keep in mind that an unsubsidized smartphone is pricey -- a base model iPhone 6 will run $650, or roughly $27 a month. At this point, monthly installment plans are fairly standard in the industry -- even fellow wireless giant AT&T has been increasingly pushing them on customers.

Other carriers let me upgrade early. How often can I upgrade with these new plans?

You can upgrade whenever you want -- as long as you pay off the previous device. Other plans, including T-Mobile's Jump on Demand and AT&T's Next plans, allow you to swap in your phone early for an early upgrade. Sprint likewise allows you to pay a little more each month to upgrade your phone after one year, instead of two.

Verizon, however, doesn't offer such flexibility. The company previously offered customers a chance to upgrade early by paying a bulk of the previous device's cost and swapping in their old phone, but it eliminated that policy in May.

So be prepared to pay up if you want to switch often. One positive: There are no upgrade fees under the new plans.

What about all these unlocked smartphones I keep hearing about?

If you're freaked out about paying for your own smartphone, there's good news: We've seen a crop of affordable, but premium, smartphones emerge in the market (as long as you're not an Apple fan). Many of these smartphones are being sold directly by the manufacturers, so you don't even have to deal with going to a Verizon store to get a good deal. They're referred to as unlocked devices because they aren't tied to a specific carrier.

But here's the bad news. Many of these unlocked smartphones won't work on Verizon because of the specific technology needs of its network. There are some exceptions, including the Motorola Moto X Pure Edition and Nexus 6 from Google and Motorola. Apple has an unlocked iPhone 6 that can work with Verizon too.

My family uses a massive amount of data. How do I get a larger plan?

The largest publicly available plan is the extra large bucket with 12GB. But Verizon will offer larger buckets to customers who feel they need even more data.

Customers looking to get one of these larger buckets should go into the store and talk to a salesperson. The website will also have a link to options that range between 20GB and 200GB.

If there's no contract, I can leave Verizon anytime, right?

Yes. You can also switch between buckets from month to month in case you feel the need to use more or less data.

If you do leave early, you will still be on the hook for the full price of your device. Also, your Verizon smartphone won't be able to pick up the fastest 4G LTE wireless networks from rival carriers. In fact, you're almost certainly going to need to buy a new phone if you switch and care about a fast connection.

Also, if you are going to leave Verizon, be sure that whatever carrier you switch to offers an acceptable level of coverage. The worst thing that can happen is you switch for price but end up with a phone that drops phone calls.