My father-in-law embarked about three years ago on finding the perfect cell phone arrangement. He had one plan with one company and his wife had another plan with another company. This cries out for a “family plan”, but he wouldn’t go forward with that until he could find the right one, which didn’t exist. He just couldn’t stomach the cost.
The first thing he did was go with a prepaid variant of US Sprint. This, despite the fact that Sprint had no coverage in one of the two towns where they live. He thought this was something that you work around. I tried to convince him that it’s not worth it saving 10-20% on a cell phone you can only use half the time. He went forward, but within a few months realized that this was not money well-saved.
The story has a happy ending as he has gone with a prepaid setup that uses Verizon’s network and now he gets coverage on the campground in Genesis. He finally found something that I had actually believed probably didn’t exist: a way to beat the cell phone companies.
The NYT has an article on the superiority of the sort of monthly plans that the in-laws have:
Prepaid phone plans, where you pay the full price for a cellphone and then pay lower monthly rates without a contract, seem to offer what most budget-conscious people want. So why haven’t they really caught on?
Contract-free phone plans account for only 23 percent of the wireless customers in the United States phone market, according to the research firm Ovum. The rest are subscribers locked into contracts and paying higher monthly fees.
That’s despite the fact that prepaid phone plans are generally a better deal for most people, who can save hundreds of dollars over the course of two years compared to a contract plan.
The iPhone with a two-year contract on AT&T, for example, costs $200 for the handset and then upward of $90 a month for the plan; over two years, including the cost of the phone, customers pay at least $2,360. With a prepaid plan on Virgin Mobile, which is owned by Sprint, the iPhone costs $650 for the handset, and then $30 a month, including unlimited data (the type of data plan that people are happier with, according to J.D. Power). Over two years, that would cost about $1,370.
The Verizon-to-Sprint comparison is problematic for many (just as my in-laws discovered), but I suspect you are talking about some real savings despite that unless you are an avid user. Certainly for more than a quarter of the market.
As long-time readers know, I am skeptical of the US’s contract-based/phone-subsidized model in many respects and so articles like this just warm my heart. There is an argument to be made that the contract/subsidy model is actually better for less well-to-do customers insofar as they are the ones most likely to have trouble affording the phone in the first place. I have the sneaking suspicion, though, that the end result has not been making the acquisition of cell phones all that much easier, but rather enticing more and more people onto plans that they cannot afford.
But here’s the thing, though: Like “cutting the cord” for cable and going with all of the free options, can these plans continue to exist as affordably as they do if more and more people switch over to these sorts of plans? I might consider them to be a net bonus - even if I myself am not on one - even at higher rates simply because I like the “model” better. On the other hand, I found myself thinking that people on these plans shouldn’t necessarily be encouraging people not on these plans to get on them.
We will probably stick to our regular Verizon plan. We’re under contract and on the whole as we move from one place to the next it makes more sense to us not to play games with our cell coverage. I may revisit the issue in two years.