No, Verizon Doesn't Want to Ditch Contracts

There were recent reports that Verizon  (NYSE: VZ  ) CEO Lowell McAdam would be interested in ditching service contracts. However, this isn't likely to be the case, since the major carriers -- Verizon, AT&T  (NYSE: T  ) , and Sprint Nextel  (NYSE: S  ) -- have spent years building fortresses around subsidies and contracts to reduce the risk of becoming commoditized service providers. Big Red is certainly watching how T-Mobile's big move away from contracts works out, and could adapt if need be.

In the following video, Fool contributor Evan Niu, CFA, explains why Verizon definitely doesn't want to get rid of contracts.

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