Verizon May Follow T-Mobile's No Contract Model if Customers Want It

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Verizon Communication's CEO Lowell McAdam has said that the company could respond to the decision by T Mobile USA to scrap its contracts if customers seemed to want the facility.

McAdam told CNet that it was "pretty easy" to change up the model to eliminate contracts, and added that he would watch the consumer response that T-Mobile USA gets from its decision.

"I'm happy when I see something different tried," McAdam told reporters on the sidelines of an event.

T-Mobile USA announced a long anticipated decision to scrap minimum contract terms, but also handset subsidies in an effort to turn around a long running decline in its customer base.

The move has been seen as risky as while the overall cost is indeed lower, asking customers to effectively pay up front for the whole handset cost may be difficult in the current economic climate.

The company could see an overall improvement in APRU rates and net profitability, but lose lower end customers to rivals still offering subsidised handsets.

The mobile networks are also under increased pressure to deal with handset subsidies as they depress earnings in the short term, particuarly due to the heavy upfront costs they invest in premium smartphone subsidies.

On the web: CNet

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Tags: verizon communication  lowell mcadam  t-mobile usa  USA 

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