Alltel Wireless, which is in the midst of being acquired by Verizon Wireless (making the carrier the largest in the U.S.), wants to shake up the wireless industry of sorts. How? Require one-year contracts for its new wireless subscribers without raising the subsidized prices of its wireless handsets.Sounds insignificant, but it isn't. For quite some time, almost all national wireless carriers in the U.S. have required two-year contracts with most postpaid wireless plan and phone purchases. This gives the carrier time to recoup the cost of those expensive handsets that are offered at heavy discounts but actually cost quite a bit. And then, the carrier has to make a healthy profit after that recoupment as well.
Alltel could force the hands of the other national carriers to starting offering the option of one-year wireless contracts while keeping phone prices heavily discounted. It's true that Alltel Wireless is quite small compared to the larger wireless operators in the U.S., so carriers like Sprint Nextel Corp. (NYSE: S) and AT&T, Inc. (NYSE: T) may not feel pressure to offer one-year contracts.
But then again, Sprint's Boost Mobile prepaid brand has upended the prepaid wireless market by offering an "unlimited everything" prepaid wireless plan for $50 a month. Smaller, more nimble carriers can sometimes indeed goad the larger guys into changes.
Alltel could force the hands of the other national carriers to starting offering the option of one-year wireless contracts while keeping phone prices heavily discounted. It's true that Alltel Wireless is quite small compared to the larger wireless operators in the U.S., so carriers like Sprint Nextel Corp. (NYSE: S) and AT&T, Inc. (NYSE: T) may not feel pressure to offer one-year contracts.
But then again, Sprint's Boost Mobile prepaid brand has upended the prepaid wireless market by offering an "unlimited everything" prepaid wireless plan for $50 a month. Smaller, more nimble carriers can sometimes indeed goad the larger guys into changes.
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