Are you paying too much for your cell phone bill?

February 3, 2013
    Pretty soon, all our online and real-world purchases could be paid through our carrier bills. Bill shock, anyone?


    A recent study by Consumer Intelligence Research Partners (CIRP) indicates that nearly half of all Android users are spending over $100 every month for service with a mobile carrier. When it’s all tallied, 86% of us spend over $50 monthly. With so many attractive prepaid options, isn’t it time we consider a move to prepaid? For a majority of users, a little change will do us good.

    The raw data

    The chart below details some interesting user statistics. All in all, roughly 90% of users pay over $50/month for their plan. In speaking strictly of Android users, 56% of us spend over $100/month on our plans. These numbers are per person, and not per plan. Please keep in mind that the numbers are rounded, so the totals may be off by a percent.

    This study was done over the last quarter in 2012, October to December. This is a prime time for device sales and new activations, as well as those renewing their current plans. This data does not discriminate or discern between carriers or devices.

    Monthly_Bill_By_OS

    Ending subsidies

    T-Mobile has recently decided to end all subsidized plans, instead utilizing a lower cost monthly rate. With this scheme, users are responsible for purchasing the device for the full price, then choosing the plan that works best for them. It’s a very linear approach to mobile service and one T-Mobile clearly believes in.

    The trick is getting consumers to understand the ins and outs of this thinking. T-Mobile will rely on staff to communicate to customers just how much they save overall versus the subsidized plans of other carriers. We’re not used to spending quite so much up front, so education will be a paramount concern for T-Mobile moving forward.

    prepaid-phones-front

    Is prepaid the answer?

    Prepaid mobile plans are not new, but they are gaining traction. What has usually been attributed to low-end devices and very minimal service is now a viable consideration for all mobile device users. The Nexus 4 showed us that an unlocked device doesn’t have to cost an arm and a leg, making the idea of unlocked devices and prepaid plans much more approachable for consumers. Many are starting to realize that, even with the higher cost of purchasing a device, the savings really do exist.

    Prepaid plans from AT&T as well as T-Mobile have been around for some time, allowing you to take any unlocked device and use it on their networks. The benefit to this is the ability to switch at your leisure, get a lower-cost plan, and choose which device you’d like to use. Verizon has recently began offering pre-paid service, which gives you access to the best network in the country. The downside is that Verizon operates on a CDMA network, and you wouldn’t have the ability to take your device to another carrier.

    GoSmart

    What plans are out there for me?

    The unsubsidized plan model is currently only available on T-Mobile, as other carriers are patiently waiting to see if they should follow suit. While you always had the option to purchase a phone at full price and choose a plan, the price is often higher than a normal unlocked device. As for prepaid plans, we’ll look at your options with the four major carriers. No matter where you live, something is bound to work for you.

    T-Mobile

    The recently launched Go Smart service is meant to be a very streamlined approach to prepaid service, with plans starting at $30/month. For smartphone users, the $45/month plan is probably the most attractive, with unlimited high speed data. T-Mobile also has its regular prepaid service, but Go Smart represents a huge savings over those already competitive prices.

    AT&T

    AT&T plans start at around $25/month for basic service, but data service will cost extra. With 1GB of data running $25/month, the cost quickly escalates to a base price of $50/month for smartphone users. This method of piecemeal service may not work for many users, making T-Mobile a much more attractive offer.

    Sprint

    Sprint recently introduced the “Sprint as you go” prepaid service, with smartphone plans starting at $70/month. The devices are competitively priced, though you have a few restrictions. First, as Sprint operates on a CDMA network, you can’t use any device you like. Purchasing one of its phones is mandatory and the selection is severely limited right now. While $70/month may represent a savings, it does not come without some drawbacks in this scenario.

    Verizon

    The champion of networks has clearly heard the cries for lower-cost prepaid service, and answered in kind. Its offering, similar to Sprint in both pricing and phone selection, has only the Verizon network to rely on for a tipping point. The best phone available is an HTC Rhyme, and the plans start at $60, though the $70/month plan is a much better alternative for smartphone users. The real difference between Verizon and Sprint? Sprint’s data is unlimited, while Verizon caps you at 2GB/month on the $70 plan.

    old android

    Is having Android a problem?

    While we think of Android differently, a carrier does not. Accessing data affects them the same, regardless of type of device. Your provider simply charges more for devices that access more. With consumption growing each year, the need for more investments by providers is necessary. Android does, however, have ways to alleviate your dependency on data.

    While some of the prepaid plans throttle or limit your data consumption, Android has some stopgaps you can use to relieve some of the data usage on your device. Apps such as DS Battery Saver allow you to better manage how your phone utilizes power and data. Making important files in Drive available offline will also alleviate your data consumption, as will doing the same with your favorite music in Play Music. Save a map of your city to navigate without using data, or simply turn mobile data off when you don’t need it. If you don’t want to fuss with settings, NFC Tags are a great way to manage your power consumption in different environments.

    Android money

    A case study

    These numbers we’re discussing only pertain to individual plans, and not family plans. While subsidized plans may be best for a family, it’s worth taking a hard look at the numbers to discern which is best for you. For this exercise, we’ll use AT&T as our example for subsidized, and T-Mobile as our example for prepaid. The offerings of these respective plans are similar, giving us a better idea of services offered versus cost. We’ll use a Samsung Galaxy Note 2 for this exercise, as it gives us a median in terms of device.

    For a subsidized plan, we’ll spend $299.99 for the device. The basic plan of 450 minutes would cost $39.99. The 5GB data plan (which is fair for smartphones) is an additional $50 and unlimited messaging is $20. We’ll factor in $10 for monthly taxes and fees, bringing the monthly bill total to $119.99. Also factoring the cost of the phone and $35 initiation fee, your startup cost for an AT&T subsidized plan is $454.98. Over the course of one year, you will be spending $1774.87.

    If we were to purchase the Samsung Galaxy Note 2 unlocked, the device itself will cost $689.99. With T-Mobile, we can get a prepaid plan at $70/month that gives us unlimited access to the network. There is no initiation fee or startup cost and no monthly taxes or fees. Over a 12-month period, we will have spent $1529.99. If we choose to utilize the Go Smart plan at $45/month we discussed previously, our 12-month cost for plan and device is $1229.99.

    As you can see, this is a savings of up to $544.88 annually. The average consumer has a mobile device for about two years, meaning that while your subsidized plan may soften the blow up front, a prepaid plan will actually earn you the cost of the device over a 24-month period. The subsidized plan may give you the phone at a lower cost, but the savings with a prepaid plan could save you the cost of a device altogether, which is like getting a free phone.

    Apparently, some families like sharing everything, including their tablet computers (Photo credit: Shutterstock)


    Families

    In terms of subsidized versus prepaid, the family dynamic is very different. The cost of devices is much more approachable with a subsidized plan if you were buying 4 smartphones, and the plans are often a better value. Carriers like U.S. Cellular are offering payment for families to switch, and there may be a good reason for it.

    The difference is consumption, as most family plans have a data plan all devices pull from. If your family is full of data hogs, going prepaid and getting everyone their own plan may just be a better bet than overage fees every month. If your family members use a lot of data, as is routine with smartphones, treating each person on the plan as an individual may end up saving you quite a bit.

    What do carriers want?

    The really easy answer to that is ‘your money’, but it goes much deeper than that. Let’s take the iPhone, for example. Carriers pay Apple a large subsidy to have the iPhone. Sprint won’t make any money from iPhone sales until 2015, as it invested over $15 billion to get the device. Why would the carrier do something like that? It gets subscribers, plain and simple. The device only ties you to the service, which is where the real money is made.

    Calling carrier’s relationship with Apple “irrational” may be a stretch, but this recent interest in unsubsidized plans does signal a potential change in how we pay for our service. All manufacturers charge their price, and subsidies are meant to help the carrier make that up over time. Carriers do everything they can to keep us interested, from updating networks to LTE to offering discounts on accessories  They need us much more than we need them.

    money-carriers-feature

    Conclusion

    The power rests in your hands as a consumer. You are in control and only you can decide what your needs are and how they are best met. I can speak to this issue personally, as switching from Sprint to T-Mobile prepaid saved me $77 each month. Even when I factor in the cost of my Nexus 4, I save $674 over the course of 12 months. I don’t know about you, but I can think of a lot more to do with $674 than stare at my phone wishing I had a signal.

    Comments

    • mjolnirxz

      i agree with the cost savings with tmo’s plans, but if i pay upfront it better be unlocked too

    • http://www.thinkingbrian.com/ ThinkingBrian

      Those are interesting numbers and while most Smartphone users do in fact pay monthly for there bills, I don’t. There are several smartphone users that pay as you go especially on T-Mobile, AT&T GoPhone, Boost Mobile and more that pay when needed..

      So since I’m a very light talk and text user who doesn’t care about cellular data, my phone bill is $100/year with money left over. I save my data usage for when wifi is available like at home or a hotspot.

      Right now, I’m on AT&T GoPhone using the 10 cents per minute plan and 20 cents per text. Of course if my usage went up, then I would have to upgrade to a better plan.

      Note: There are two reasons why I’m using AT&T GoPhone service, one is I have an unlocked GNex that only works on a GSM network and second, T-Mobile lacks on coverage in my town. T-Mobile has little to no coverage were I use my phone the most, otherwise I would be on T-Mobile.

    • 1ceTr0n

      Is this a rhetorical question?

    • 智 慧

      too bad T-Mo’s signal is crappy where I live because I appreciate their friendliness toward the prepaid concept and their customer service aint too shabby. but that signal ugghhhh – it’s for the birds

    • Scott Elsdon

      Which country is this about ?

      • 1ceTr0n

        The only one that matters, the USA

        • Pete

          You are so biased! USA does NOT MATTER to millions that are outside of there!

    • http://www.facebook.com/domagoj.tokic Domagoj Tokić

      Wow… people in the US really like to throw away $.
      I spend about 10$ per month and still have 1GB of net to use.

      • Matt Rickard

        where the heck do you live? what service do you have?

        • http://www.facebook.com/domagoj.tokic Domagoj Tokić

          Croatia, economy is piece of shit, but at least we have cheaper services and know how to manage money (you can even get 1GB + 300mins of talk time for 6$). Telecommunication companies like yours couldn’t survive here with your kind of phone rates. BUT… I have feeling like people from the US have their heads stuck up their asses since they are always signing up 2 year contracts for phones and paying 100$+ monthly for service. Well… fuck you people, you have the cheapest tech of every “normal” country. Here in Croatia, newest phones cost about 1000$ (with shitty economy as I said), but no, 600$ is too much for newest phone in US.

          • Greg Lee

            Are you serious?!!! LOL, Ummm, you do know you’re pretty much considered a third world country, right? Telcos couldn’t survive there?!?! Well, yea! Its a war zone living there! I’m surprised that one cell tower you have in the middle of the capitol is still standing. Oh, what does Croatia produce/export… oh, that’s right – minefields!

            • http://www.facebook.com/domagoj.tokic Domagoj Tokić

              All right, US education is making it’s famous appearance here ;)

              Nothing to do here…

              P.S. War zone? You just missed a continent, no big deal :)

            • Greg Lee

              oh so now u chime in again, huh… well since you’re obviously living outside the modern world also… let me spell this out for you… I was saying… Who the hell is a guy from Croatia to criticize any country. Who the hell cares what happens in Croatia! I don’t know where it is and really could careless about it or what it does or doesn’t do it’!

            • http://www.facebook.com/domagoj.tokic Domagoj Tokić
            • FrillArtist

              Lol. “If Croatia disappeared…”

              I thought it already did.

    • http://www.facebook.com/Ladygagalover2693 Christian Harris

      I love T-Mobile. I used to have it, but then I broke my phone. Great service in Philly Metro Area. But I like AT&T b/c it has service in the subway

    • delores_in_wa_state

      The claims to be an article, but sort of reads like an ad, doesn’t it? I personally kept having more and more problems with T-Mobile. I now have unlimited phone, text and web for $45.00 a month. Prepaid – no contract.
      I use Straight Talk (WalMart sells it) who uses Verizon towers – and can choose any phone I already have or buy if I get their $15.00 SIM card. I am not a big fan of WalMart products or their treatment of employees in the US, but neither will I throw away money each month.

      • blarelli

        I’ve had pretty good luck with T-mobile in the 6 months I have been using their prepaid service. I had one day that my payment went through and it didn’t renew my service automatically due to a computer hiccup, but a quick stop by a dealer on the way home fixed it. Data speeds aren’t spectacular, but are sufficient. Voice quality is good. Text delivery is prompt.
        I’ve heard of way more people having trouble with straight talk than with t-mobile, especially smartphone users that get the rude reminder that “unlimited data” isn’t really unlimited.

        • delores_in_wa_state

          I have not had one bit of trouble with the service here in Sioux Falls. My son (who has dropped his phone several times) began to, but I don’t blame ST for that. We both have Samsung – he had a slider, I have used the Motorola they offer, then bought a Galaxy III online to use with the SIM card (a T-Mobile built phone). I guess it depends on your location and phone.

          IMHO if you buy pre-paid vs contract you WILL get better service because with pre-paid you can always walk away without a penalty charge. If they were not so greedy they would realize that if they offered good service AND a good phone, people would not mind the contracts, but………

      • FrillArtist

        Straight Talk use T-Mobile or AT&T’s network. NOT VERIZON.

        • delores_in_wa_state

          In WA state where I first bought mine, it read Verizon towers. And this plan does get service in the Rocky Mountains. Verizon is the only service I am aware of that you can use in Montana. Maybe it depends on where you are? But, it still works for me in SD.

        • Cal Rankin

          wrong. Several phones sold by straight talk use the Verizon network, including the iPhones. The Galaxy S III uses Sprint’s network, and AT&T has terminated its agreement with Straight Talk for new customers

    • David

      I switched from sprint to cricket, got awesome service and price, I will never ever get a contract again.

    • http://twitter.com/worldofmatt Matt Scott

      I pay about $12 a month using Ting. I can’t believe this article doesn’t even mention them. You pay for what you use, no data plan necessary with a smart phone. They are worth checking out.

      • blarelli

        Just did, and if I were in a position to use a phone and not need a data plan, it is worth while. However, once you tack on data (and I do need data with how much I travel), it becomes rather unattractive. If you need any data at all, T-mobile beats them.

      • Cal Rankin

        Ting looks great, but my family is full of data-mongers, who insist on a large data allotment. Since Ting tops out at 3 GB that (if I’m correct) we must share, I’m looking elsewhere

    • Bruce Gavin Ward

      a large part of the problem is articles in blogs such as Aauthority that keep talking about ‘greatDeals’ when a carrier advertises a lower ‘contract initiation price’, implying that is all you pay for the phone. But actually when you pay huge monthly fees for data usage, you end up paying three or four, or more times the actual full retail for that phone. The only rational way to go is buy the phone/device, and get the best possible monthly rate for connection services by comparing prices, and even making an offer to your preferred carrier. [all NO contract!!]

      • FrillArtist

        Exactly. I hate it when Android site advertise or post contracts as “deals”.

    • Bruce Gavin Ward

      and NEVER buy a phone from a carrier for inflated prices!!

    • blarelli

      I can’t believe people are paying that much for their cell bills when you can get unlimited everything for $30 a month on T-mobile prepaid (+$3.99 skype subscription to make it unlimited talk), especially when you can get a high end unlocked phone for less than $400.
      Based off of what I was paying for my Sprint contract before I switched, I’m paying about $1050 a year less than I was, and despite my evo being “4g”, I get faster HSPA speeds than wimax.

      • http://www.facebook.com/dacha.liceknjiga Dacha LiceKnjiga

        that’s the one I took after terminated over $140 plan. instead of Skype you can use Google voice with some app you’ll have free calls.

        • FrillArtist

          With Skype, you get far better call quality than those Google Voice tethered apps.

    • http://www.facebook.com/christian.lindqvist.33 Christian Lindqvist

      How about this in Finland you can get a Saunalahti.fi (Carrier) plan that includes 5000min and 5000 text/month 4G truely (no fair use policy bs) Unlimited with speeds up to 50Mbits/s my friend tested it out and normaly on speedtest.com he gets over 40Mbits download speed with signal everywhere(lte in citys and towns DC 3G or 3G with 21-42Mbit/s speeds in the contryside) it works in subways parkinggarages under ground tunels and in the contryside for 25€ about $33month how about that!

      • MasterMuffin

        Finland FTW :D

    • Nishant

      Glad I am living in India
      all phones are sold unlocked

      majority are GSM carriers(10 out of 12)

    • prjayne

      please note that Sprint’s new As You Go service is a no-contract plan but it is not prepaid. Customers receive a bill and pay after the fact. It is an option for customers who want to be with Sprint but may not be eligible for a postpaid account.

    • http://www.facebook.com/usaharris Benny Major Harris

      “This is how I lowered my cell phone bill to $0.00/month… http://breakfreewireless.sharesolavei.com/ Inbox me if you have questions.” fb: http://www.facebook.com/usaharris

    • http://www.prepaymania.co.uk/type/Prepay.html Cristyn Lieo

      PAYG service is coming to every country and its really beneficial for the users whose use is not very much but medium.

    • darkraider

      Been using the T-Mobile $30 prepaid since I got my Nexus and no problems till now. Unlimited 4G till 5 GB, own my phone and can do whatever I want. They have since discontinued this option after the Un-carrier approach; but I am grandfathered in and am not changing my plan!

      • smokebomb

        I had to go to unlimited everything but the 30 dollar plan helped in making my decision to leave Verizon.

    • Alan

      I have a Facebook page that addresses this very problem: https://www.facebook.com/nomorehighphonebill

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