3 On Your Side: No-Contract Cell Phone Plans

jim-donovan-web Jim Donovan
Jim Donovan is a 13-time Emmy Award-winning consumer reporter w...
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By Jim Donovan

PHILADELPHIA (CBS) — Consumers now have a lot more options when they get a new cell phone plan.  No-contract options can help lower that monthly bill and as 3 On Your Side Consumer Reporter Jim Donovan tells us, they’re becoming very popular.

Jake Durkee is looking for a new mobile phone plan that doesn’t lock him in to a new contract.  He says, “It’s all about flexibility. I mean if you have an option to try before you’re committed, why wouldn’t you do something like that?

According David Lazarus, Los Angeles Times Consumer Columnist, “The wireless companies have to compete more aggressively for your business and that means they have to offer lower prices, faster speeds, greater reliability, or you are going to leave.”

Traditional contract plans offer new phones for far less than retail – some are even free.  The rest of the cost is built into a customer’s monthly bill.  No-contract plan users pay full price but there’s no charge to leave.  Lazarus says, “Once you’ve paid off your phone, the cost of service goes down.”

T-Mobile launched the trend and companies like Verizon and AT&T have followed offering their own no-contract plans. They are getting great reception from consumers like Durkee who says, “I’d rather pay up front to not have any obligations, get the phone I want, and be able to kind of do as I please after I’ve paid it off.”

It’s interesting to note that 40 percent of AT&T’s new smartphone customers, about 1.1 million people, have already signed up for the no-contract plans in the last three months.

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