No-contract options may help lower monthly mobile bill

WASHINGTON, DC (WUSA9) -- Jake Durkee wants a new mobile phone plan that won't lock him in to a new contract.

"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." he says.

Consumer experts say no contract plans give you an advantage.

"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," says LA Times consumer columnist David Lazarus.

Traditional contract plans offer cheaper phones than retail, some even free. The rest of the cost is built into the monthly bill. No-contract 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 started the trend the Verizon and AT&T followed with their own no-contract plans. They're getting great reception from consumers.

Jake Durkee says, "I'd rather pay up front to not have any obligations, get the phone I want, and be able to do as I please after I've paid it off."

Forty percent of AT&T's new smart phone customers, about 1.1 million, have signed up for the no-contract plans in the last three months.

Experts say cell phone makers will soon feel pressure to lower the cost of mobile devices since more users are paying full price for their phones.


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