Alltel Moves To One-Year ContractsAlltel Moves To One-Year Contracts

Alltel is trying to shake up the cell phone industry by cutting the length of a standard cell phone contract in half while retaining the same price for the handsets.

AT&T, Sprint Nextel, T-Mobile, and Verizon Wireless are the nation's four biggest cellular providers, and the companies generally offer subsidized handsets with a two-year contract. Alltel followed this model as well, but said starting Friday it would offer users a one-year contract while still retaining the two-year contract price for handsets.

"Wireless customers have been waiting for an option like this for a long time," Paul Bowersock, senior sales leader for Alltel, said in a statement. "With a one-year contract option, customers can take greater control over their wireless experience, having the flexibility to choose their contract length and the latest innovative handsets at the most competitive price possible."

Carriers contend that a two-year contract is needed to recoup the costs of subsidizing handsets, which can cost as much as $400 per phone for popular devices like Apple's iPhone 3G. Alltel said it will continue to keep its handsets at the current pricing, and the regional carrier offers modern smartphones like the BlackBerry Pearl Flip and the Treo Pro.

The bulk of Alltel's customers and assets were purchased by Verizon Wireless last year for more than $28 billion, but it still operates as an independent carrier that has about 2.2 million customers across 22 states. Because of Alltel's relatively small size, the move to one-year contracts likely won't goad the four largest mobile operators to follow suit.

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