Why aren't you on a pre-paid plan?

Why aren't you on a pre-paid plan?
When it comes to carriers and the way you use your smartphone, the US market differs from some other markets in the extremely huge control carriers have over what’s going on. Virtually everyone is on a two-year plan, enjoying a huge carrier subsidy on a smartphone, but still paying hefty sums each month for 24 months. Is that model really any good for the user and why a big part of the rest of the world is using mostly pre-paid unlocked phones?

Those are some of the questions that bothered us recently as we get to see the latest iPhone 4S arrive on pretty much every regional carrier there is and the Samsung Galaxy S III being almost equally widespread. Previously, we blamed the lack of quality devices on those smaller carriers for their misfortune, but now that most have the hottest devices on the market, is there any reason to be on an extremely expensive two-year plan?

Let’s first look why signing up that two-year deal could be a bad idea from a financial standpoint. The point has been brought up before, but recently New York Times’ Brian Chen revitalized it by bringing in some shocking numbers. Turns out the exact amount you’d save if you go pre-paid could amount to as much as $1,000 over two years.

What carriers like AT&T don't tell you explicitly up front is that after two years, you'd pay over $2,360 for the phone and service.

What carriers like AT&T don't tell you explicitly up front is that after two years, you'd pay over $2,360 for the phone and service.



Yes, one grand. That’s how much you’d save. The sum might be an eye-opener for those who think that getting a $200 subsidized phone is a good deal. Actually, carriers do their math and get that subsidy back with a hefty profit on top over the contract term. Compare, AT&T’s iPhone plans starting north of $90 (with the basic 450 minutes, the basic 3GB of data and included unlimited messaging), and Virgin Mobile’s similar offers for $35 a month, but with 350 minutes, data throttled at 3.5GB and including mobile hotspot.

The exact numbers for AT&T are $200 up front for the phone, so after two years you pay a whopping sum of $2,360 for bills for two years. On Virgin Mobile? You pay more initially - $650 for the unlocked phone, but with the low bills, the amount you pay in two years is $1,490. Customers see that upfront sum - $200 versus $650, but most fail to look in the longer term and actually get the big picture. The difference in the end sum is what matters and the exact figure you save here amounts to $870. On some regional carriers with similar $30 monthly offers this grows to savings of around $1,000.

Smaller regional carriers offer virtually the same conditions for twice or often even three times cheaper. Data is slower, though.

Smaller regional carriers offer virtually the same conditions for twice or often even three times cheaper. Data is slower, though.



The two big counterarguments are data and coverage. Coverage on some regional carriers is a bit limited. Still, if you check carefully the coverage map before buying, you’d see that most have some form of a roaming deal with the big carriers, so it should still be solid, but hugely dependant on location.

Data is the other thing that the big four have as an undisputable advantage. In contrast to regional carriers, Verizon’s 4G LTE is blazing fast, AT&T and Sprint are rolling out equally fast networks, and none of the regional players can boast with such speeds. If you don’t care about those two, though, it might be a good idea to look into pre-paid plans. So why aren't you on a pre-paid plan? Don't hesitate to share with us your reasons in the comments below! 

source: NY Times

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33 Comments

1. Phullofphil

Posts: 1740; Member since: Feb 10, 2009

I guess is that I enjoy Verizon costemer service ther fast 4g and great coverage into remote areas. But considering that I still am grandfathered in to unlimited data is holding me. Now since I have to pay full price to keep it I am considering my options. If I ever come to a point where I am forced off my unlimited data I will be leaving Verizon. I am out of contract right now and I got a Samsung galaxy 3 so I am in no hurry. But considering I am just An addition to my dads line I don't pay much either. If I do leave I think I will be going any way posesable to get the best coverage and the fastest data I can find but not sign a contract but I also want unlimited data. So pre paid probably will be my next path. I will also get on a plan that I can use international unlocked phones so I can get a better selection on the best of the best and tru galaxy phones that hit that market first.

3. rasinhussy

Posts: 89; Member since: Dec 28, 2008

Unlimited Minutes, Messaging, & Data for $45/Month. Sure not "4G", but HSPA+ works just fine for me.

12. PotDragon

Posts: 214; Member since: Jul 22, 2011

Too funny. I bet Daddy bought every single phone you ever had too. Of course, the writer fails to take the real world into account. Children lose phones. Women drop them in toilets. Men destroy them in various ways. Factor in replacement cost for each handset on your family plan, still think you are ahead? Factor in being stuck with the same handset for 2 years. Factor in the value for your money; I hate vzw customer service....HATE IT....but the coverage and speed are the best. On this planet, some things are more than a zero sum game. I want those whose phone I pay for to be RELIABLE. It is a safety tool and I want it to work. Also, to switch midstream would mean 1) wasted cash outlay on current handsets 2) potential early cancellation fees 3) headaches while family chooses new handsets 4) cash on multiple unlocked handsets. Those are among the reasons to remain on a 2 year plan...not to mention I get upgraded phone every year. Seems the writer should know these obvious truths. What planet is he from?

15. remtothemax

Posts: 260; Member since: May 02, 2012

i am not really sure what point your trying to make other than being offensive maybe if you tried to just get your point accross rather than troll someone, you might make sense

32. items17070

Posts: 70; Member since: Dec 20, 2011

agreed!

33. rasinhussy

Posts: 89; Member since: Dec 28, 2008

Every cell phone I've had I bought myself, thanks! 2Yr Contract (2 lines) on Verizon $50 Monthly Account Access + 2x$40 for two smartphones= $130 per month. $130 x 24 months = $3120 for two years + two smartphones (2x$199) = $3518 for two smartphones with 1GB of SHARED data and Unlimited Talk & Text (Not counting taxes and fees 15%) No Contract (2 lines) on Straight Talk $45 x 2 lines = $90 per month x 24 months = $2160 (a savings of $1358) You could almost buy 4 unlocked Galaxy Nexus' from Google @ $349. Doesn't seem like rocket science to me, maybe I should ask my daddy.

2. loken

Posts: 462; Member since: May 09, 2012

it works diffrent in hong kong u buy a plan for a phone say for 368 per month. and this keeps adding and u pay monthly until 1yr , then u can keep the device forever :D helps poor families :D

4. threed61

Posts: 259; Member since: May 27, 2011

For the same reason people aren't on the {slightly} more affordable T-Mo and Sprint. Coverage and speed. A smartphone isn't much good if you can't use it, and experience says that prepaids coverage maps don't reflect real world results. My time is also valuable, and waiting and waiting and waiting for each page to load is just not worth the savings.

5. andro.

Posts: 1999; Member since: Sep 16, 2011

The simple and main reason is alot of people don't have the likes of half a grant cash straight up on a phone pre pay,but might have the 100 bucks and be able to spread the rest over a contract. Its like a buying a car,no you might not have the cash to buy it 10,000 bucks up front but you could manage and afford to buy it over a 5 year loan. Yes you'll pay a bit more in the long run but it'll be the only way to get the car you need in the a sustainable economic way

25. jimjam unregistered

If you can afford $70 a month you can afford the upfront cost. Either that or you are on the road to being in debt or some other financial trouble at some point in the near future. I just don't get why people don't think. If it was all down to the cost you'd think everyone would rather save $1000 over 2 years all for a mere extra $400 upfront.

6. daniel_bargs

Posts: 325; Member since: Nov 27, 2010

in prepaid you can control yourself. in the Philippines, i only know 2 people who's on postpaid here.

7. shymonsam

Posts: 4; Member since: Apr 10, 2012

In India people purchasing phones at full rate unlocked , no carrier is offering any subisidy nor they offering any phone ! you have to purchse from the manufacturer , So the biggest plus is that you can change your carrier any time without changing your phone number ! so consumers with their own devices are the real KINGS !!! Carriers have come after you with pleasing plans , thats what consumer wants right ?

8. ImHungry

Posts: 17; Member since: Jun 25, 2012

because the virgin mobile iPhone says Virgin in the corner. wtf no thank you

9. Aeires unregistered

In my case, no. I bought the Galaxy Nexus when Google dropped it to $350. When I activated it on T-Mobile, the plan I went with was close to $30 less per month than buying a phone with a two year plan, so I'll save a good amount in the two years time. Like with anything, you have to weigh the options and decide what works best for your needs.

18. jlscott777

Posts: 45; Member since: Feb 10, 2012

Aeires "Like with anything, you have to weigh the options and decide what works best for your needs." That is the key right there, you really have to look at what you need in a phone and a plan, there is no "one size fits all", ditched my ATT plan almost 2 years ago, bought a Nokia N8 from Amazon and went with T-Mobile pay as you go. Since I am a self employed electronics designer who works from my home office I am always connected through WiFi, do not travel much, hardly ever make actual phone calls on my cell, and hardly ever connect to the internet for more then checking email. My office has 2 desktops, a laptop, and a tablet. I use my N8 for taking pictures, Nokia Drive GPS is great, music player, and checking email. So it fits me just fine. The real key to saving money is not to buy what you do not use.

10. jos_031

Posts: 62; Member since: Jun 12, 2012

I use prepaid in India. never used post paid.. change the sim as better offer comes from others, result call rates to same carrier at .1cent(us) per minute. other carriers 4cents. SIM card are offered free. there are second call plans to call anywere in india for 0.1 cents per 2 sec. sim validity lifetime. with 78 cents i can sent 3000 sms nation wide for free for 1 month.

11. mobilefuture

Posts: 224; Member since: Nov 12, 2011

Over here in pakistan we buy phones at full price and then get prepaid plans. Like i dont call much but i still have a cheap call plan, 75 paisa(0.75 rupee)/30sec. And i get 2500 messages for 2 weeks at the cost of 30 rupees so in one month i hardly use up 100 rupees which is a bit over a dollar. 1 dollar=96 rupee if im not mistaken. Prepaid FTW

13. hawke9150

Posts: 32; Member since: Jun 17, 2011

The anser to the headline is simple. I want to be sure that when and where I want to use my phone it works. Question I have is why does every article I see that talks about how much you can save on Pre-Paid plans always show the Virgin Mobile Plans? Why don't they show Tracphone which is cheaper even yet? Is Sprint helping the author write these articles?

31. Victor.H

Posts: 1026; Member since: May 27, 2011

The author himself used Virgin Mobile for quite a while :) But really, the article is about pre-paid carriers in general, there's no particular reason why I picked Virgin Mobile, no need to dig deep into it.

14. QWIKSTRIKE

Posts: 1457; Member since: Mar 09, 2010

You don't get unlimited anything on those plans. If you use your phone alot you lose if you are a Sprint customer.

16. jacky_luvsjrod

Posts: 53; Member since: May 26, 2010

if i had to go to prepaid it would probably be att go phone cuz of the coverage i had boost, metro, virgin when i was broke last year and the coverage sucked it was pretty bad in LA, San fran, arizona, vegas, NY and seattle the places i go the most. I remember lastly i got the lg thrive on att go phone (yes i know sucky phone) but it got the job done which for 75 bucks it gave me UNLIMITED minutes so never had to worry about not having minutes , unlimited txt and pic messaging and only 1 GB of data . I remeber i was hesitant a first cuz i tought it was really expensive but i decided to try them out i was very impressed with the coverage since day 1 i had better coverage better call quality and faster internet some people say att throttles go phone customers but i had better 3G speeds than i had on metro, virgin, boost . And another thing i liked was i now had signal inside many buildings were with the other companies i had none and finally i was able to hear the person i was talking loud and clear no more static and had coverage in all those places i mentioned above were before i had bad service. I had att go phone for about 8 months till i got a good job and got a s3 on att on contract and keep having the same good service i had on go phone. So if i had to go prepaid again for watever reason i would choose att go phone.

17. snowgator

Posts: 3614; Member since: Jan 19, 2011

Are you (like me) in a rural area covered by maybe one "small" pre-paid carrier? If so, you are guaranteed poor service. While I understand the dollars and sense sides, the "sense" part is that it is only saving money if it works. If I were closer to Indianapolis, St. Louis, or Chicago (maybe even Champaign), than post paid carriers would make a LOT more sense.

19. DontHateOnS60

Posts: 872; Member since: Apr 20, 2009

Data, coverage, and the ability to use my unlocked 850/1900 3G GSM phones I have are the reasons why I can't go prepaid even though I'd love to.

21. pfroo40

Posts: 28; Member since: Jun 12, 2012

Check out Straight Talk's bring your own device prepaid plan. $45/mo, ($40 if you buy a year in advance), for "unlimited" everything (data throttles at 5GB), uses AT&T's GSM/HSPA+ network. I love being able to swap phones easily and am currently using an international One X on it and it works perfectly.

20. Sprissy

Posts: 193; Member since: Feb 11, 2012

I had Verizon for years but recently switched to Sprint and saved $30 a month on my bIll. It was a tough decision but paying $600 for a new phone to keep my unlimited data was unacceptable. I may consider prepaid at some point if their coverage grows and fits my needs.

22. nicholassss

Posts: 368; Member since: May 10, 2012

I'm on verizon because I still have unlimited data, thats it. if i losethat i'll go to something cheaper with unlimited data and high end phones.

23. torr310

Posts: 1619; Member since: Oct 27, 2011

I wanted to go with T-Mobile prepaid but I couldn't find the phone I like to go with its 3G band.

24. Jyakotu

Posts: 867; Member since: Dec 12, 2008

I'm on a family plan with Sprint and even though the service isn't as good as AT&T or Verizon, it has unlimited data, which I do appreciate, even though I'm on Wi-Fi most of the time. Also, a lot of Americans aren't sold on the idea to spend $500+ for the latest and greatest cell phone. I'm one of those Americans. However, I do like the idea of BYOD and purchase the SIM card plan(s) that Net10, StraightTalk, Simple Mobile, AT&T, and T-Mobile has. I think if America had more GSM carriers rather than mainly CDMA carriers, we would be more receptive to the idea of purchasing a phone out right if it meant that we could switch carriers and have a cheaper monthly plan in the long run. However, I could see myself buying my own GSM phones and purchase a SIM card from either Net10, StraightTalk, Simple Mobile, AT&T, or T-Mobile and use one of their prepaid plans in the future.

26. JunitoNH

Posts: 1946; Member since: Feb 15, 2012

@Jyakotu You hit the nail right on the big head. Is not about spending money, we Americans do it all the time with durable goods. If you buy a washer, tv, or sofa is all good. You know your going to get at least ten good years out of the products. Carriers have brain washed people into thinking, you must have a portable pc in your pocket at all times. Furthermore, the asking prices for unlocked devices are similar to a pc, laptop, deposit on car, or a pair tickets to the Caribbean; for such a fragile device, which will become outdated in four months. Best to happen to the consumer is Google selling devices again. Hopefully, will be able to purchase not only the Nexus, but some Moto devices as well. Yeah, you pay full price for a Verizon phone, and what does it get you? nothing!!!

27. bolaG

Posts: 468; Member since: Aug 15, 2011

Speed, Coverage, Reliablity, Customer Service, and Phone options. Post-paid all the way untill dose things can be met by a pre-paid company. I've heard horror stories from a multitude of people about almost every single pre-paid company and I've seen with my own eyes the terrible coverage/customer service they provide. Cricket, Track phone, Boost, Virgin, etc. ALL TERIBLE

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