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Verizon Ditches Two-Year Phone Contracts and Unveils New Rate Plans

Verizon is revamping the way its customers pay for cellphone service. The nation's largest wireless carrier on Friday said it was doing away the practice of subsidizing your new phone in exchange for signing a two-year service contract.

The company unveiled new plans that offer a mix of discounts and price hikes and that require customers to pay for their smartphone. Under the new pricing scheme, every smartphone line is $20 per month.

Then, customers choose from one of the following four data packages:

  • Small: $30/month for 1GB of shareable data
  • Medium: $45/month for 3GB of shareable data
  • Large: $60/month for 6GB of shareable data
  • X-Large: $80/month for 12GB of shareable data

Each data package can be shared among up to 10 devices, including tablets and smartwatches, which will require a $10 and $5 monthly connection fee, respectively.

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The new Verizon price plans will be available starting on Aug. 13.

Gone are the days of Verizon subsidizing phones in exchange for people signing two-year contracts. Now customers will have to either sign up for a monthly payment plan to pay for their devices or buy them outright.

Already a Verizon customer? You'll be able to keep your current plan or switch to one of the new data packages.

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John Legere, CEO of rival T-Mobile, which eliminated annual service contracts two years ago, did not mince words when tweeting about Verizon's announcement.