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August 07, 2015

Verizon drops annual contracts, unveils new rate plans

Company moves to offer customers a choice among tiered data packages

Telecom giant Verizon announced Friday that it will ditch its two-year cell phone service contracts in favor of a new plan that allows customers to choose from a range of tiered data packages that are priced according to usage across multiple devices.

The shift, which takes effect August 13, marks an end to the practice of customers subsidizing their new phones in exchange for signing a two-year contract, NBC News reports.

Under the new plan, every smartphone line will come with a base payment of $20 per month. Customers can then select from among four packages that suit varying needs.

•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

Up to 10 devices can be shared across each plan, with a $10 connection fee for tablets and a $5 connection fee for smartwatches.

Current Verizon customers will be able to continue their current contracts or switch to a data package. All new Verizon customers will have to either sign up for a monthly plan or buy their phones at full price.

The revised plan comes two years after T-Mobile eliminated annual contracts, a move that helped the company surpass Sprint as the third largest carrier in the United States.