Verizon Wireless on Thursday started giving smartphone users the option of paying for calls in advance instead of committing to long-term contracts, a move that pits it directly against rivals like Leap Wireless
Prepaid services have become more popular in the last few years among consumers looking to avoid the long-term contract commitments that come with postpaid contracts.
The move by U.S. mobile market leader Verizon Wireless follows an announcement earlier this summer that Leap, a prepaid specialist, would start selling smartphones.
Verizon Wireless, a venture of Verizon Communications
But prepaid customers typically have to make do with less-advanced phones, while postpaid consumers get their choice of advanced phones that are heavily subsidized by operators.
The company did not offer a price list for the prepaid phones but said pricing would be close to the amount it charges customers signing up for a one-year postpaid contract.
For example, a prepaid customer would have to pay $394.99 for the Verizon's flagship phone, the Droid X from Motorola Inc
However, prepaid smartphone customers will be able to opt to pay $10 per month for data service, if they do not mind that their usage will be capped at data downloads of 25 megabytes.
In addition to fees for data services, Verizon Wireless prepaid customers have to pay for voice services, which start at $45 per month and go as high as $94.99 for unlimited talking.
Devices supported by the new service also include several BlackBerrys from Research In Motion
Verizon shares ended 15 cents lower at $30.11 on the New York Stock Exchange on Thursday. Leap shares ended down 7 cents at $10.34 on the Nasdaq.
(Reporting by Sinead Carew; Editing by Steve Orlofsky and Matthew Lewis)