The Era of 3-Year Wireless Contracts is Here

I got an email this morning about the latest Verizon deal for a free 5G phone and felt like it was PSA time after reading through its terms. This particular deal is similar to another recently launched Verizon promo, only this one was for new and existing customers on any unlimited plan. The deal itself is what it is, but I couldn’t help but notice that these deals have adopted Verizon’s new 3-year contract payment plans. I hope everyone is ready to lock into phones for 3 years.

It’s a 3-year contract disguised as a deal

We saw Verizon adopt 3-year contracts back in February, where they replaced 24-month and 30-month device payment plans with a 36-month option. Your choices when buying a phone are now to buy one at full price or sign-up for a 3-year loan, basically. You don’t get to choose different levels of payment, it’s either one or the other.

For this latest deal, Verizon is utilizing those 3 year plans and the offer of a free phone to keep you around for a while. Not that many of us change carriers often, but this certainly means you’ll be paying off your new phone for 36 months. There aren’t many ways to get out of them either. You can’t pay more each month to try and end it sooner. Your only option to end a payment plan is to payoff the remainder of the phone in one lump sum. You also can’t use the phone as an upgrade before you have paid it off.

Deals like these fall into the bill credit category, where Verizon gets you to sign-up for a 3-year payment plan that guarantees 3 years of service payments and then credits you back a monthly amount to cover the phone. You know how I feel about these “deals.”

3 years is a long time, choose wisely

But look, phones are incredibly expensive now and can cost you well north of $900 or $1,000. A 3-year payment plan can help reduce the monthly cost and get more people into better phones. My warning to those of you thinking about a 3-year contract is to take into account who the phone maker is and what they offer in terms of software support. You need at least 3 years of software support, obviously.

Samsung is a good example of a phone maker you could feel comfortable with. Samsung will update a phone like the Galaxy S22 Ultra for the next 5 years. Apple will do the same with their new phones. Google will do at least 4 years. You know who won’t? Motorola. OnePlus might be sporadic with their support too. I’m not sure anyone else makes phones anymore, so those are your options, really.

You should also consider the age of the phone you are buying. Don’t buy a year-old or 2-year-old phone on a 3-year contract. That phone is already a couple of years into software support lifespan and you could be outside of support by the time you finish paying it off. Buying the new-new if you are signing a 3-year contract is going to be your best bet.

Another thing you should do is try to get into a store and play with some phones. Again, 3 years is a really long time and you better love the software a lot. From Samsung to OnePlus to Google to iPhones, all offer quite different experiences with different sets of features. Google and Apple are often the most minimal, while Samsung will give you more than you can handle.

Accessories are something else to consider. Apple and Samsung’s phones have never-ending options when it comes to cases or other accessories. Since they sell the most phones, accessory makers aren’t afraid to make all sorts of fun goodies to use with them. But for Google or OnePlus, you might struggle to find even a handful of quality options. That’s changing some for Google’s Pixel line, thankfully.

It’s not just Verizon doing this

I know I picked on Verizon a bit above since it was their deal that prompted this post, but understand that AT&T is also doing 3-year contracts. T-Mobile is not at the moment, even if they did flirt with the idea a couple of years back. It’s hard to imagine a world where T-Mobile doesn’t re-join at some point, as it is clear this is where the industry is headed.

All sound familiar? We joked when T-Mobile merged with Sprint that having 3 major carriers would bring forth the Canada wireless experience. Canada, for those not familiar, had 3-year wireless service contracts and was often criticized for being a not-very-competitive wireless industry. Canada’s wireless regulatory body appears to have forced carriers to do away with 3-year service plans (or at least eliminated the cancellation fees after 2 years) and (most recently) ended the 3-year device payment plan scheme.

Since the US is only getting started with 3-year contracts and there hasn’t been enough anti-competitive talk surrounding them, this is a situation that we’ll have to get used to or at least be aware of.