Posted: 2:51 p.m. Monday, Feb. 3, 2014
By Clark Howard
The cost of monthly cell phone service is dropping. The change for your wallet is the best since the last big wave of discounting 15 years ago. Plans and services are morphing in many different directions all at once. That makes saving money more complicated and requires you to decide what compromises you are willing to live with to save money.
Cell phone service can now be divided into 3 types: The Big Four, discounters, and innovators.
THE BIG FOUR
T-Mobile changed the market for the Big Four with its Uncarrier strategy. You sign up no contract and pay a real price for a phone. The first person pays $50 per month, the second person on your plan pays $30, and 3, 4, and 5 people on your plan pay $10 per month. That works out to $22 per month per line for 5 people with unlimited talk and text, but only 1/2 gig of data per month. Each person can add an additional 2 gigs as needed at $10 extra per month. If you want unlimited data including a free hot spot service from your phone that is $20 extra per line.
In my case, I have 5 people on my T-Mobile account. Two have unlimited data and 3 get by with 1/2 a gig. That makes the bill for 5 lines $150 per month or $30 each line.
AT&T has suffered the most lost customers of anyone to T-Mobile as both companies use the same technology called GSM. That has set off a poaching war with AT&T paying you a bounty if you move from T-Mobile to AT&T. T-Mobile in turn will pay termination fees for you if you leave any contract carrier and come to them.
Feeling the heat from T-Mobile, AT&T has now instituted a big price cut as well for families starting February 2nd. The first two lines cost $130 per month. Not great. However, each additional line is $15 per month. For 5 lines you pay $175 per month or $35 per line. That includes unlimited talk and text for all lines and 10 gigs of data to share among the lines.
Sprint has its "Framily" plan which is a crazy, wild, confusing, and cheap plan. If you can get 7 to 10 people together, each pays $25 per month billed separately. So one person is not responsible for the bill like with T-Mobile or AT&T. The $25 gets you unlimited talk and text and 1 gig of data per line per month.
The T-Mobile, AT&T, and Sprint offers are all non-contract. That means you pay a real price for a phone. That is really easy with T-Mobile and AT&T. Cheap GSM phones are widely available.
Verizon has stayed on the sidelines so far and will likely cut rates only if the other 3 take customers from them in big numbers.
The discounters have grown their number of customers by big amounts in the last 3 years. However, I don't expect much growth unless they cut rates again. Led by Straight Talk, this group charges around $45 per month for unlimited talk and text with 2.5 to 5 gigs of data a month. All are non-contract and all buy blocks of time on the networks of the Big Four. Straight Talk is the largest and has service on all 4.
Boost Mobile, meanwhile, is offering a new special 4G service for $35 per month (for 6 months) with unlimited talk and text and 3.6 gigs of LTE data. This introductory monthly rate increases to $50 a month after 6 months. At that time, you are eligible to earn remaining Shrinking Payment milestones (potentially reducing payment to $40 month after max milestones earned).
With any of the discounters, the phone you buy or bring determines whose network you will be on.
Republic Wireless is my favorite. For $25 per month you get unlimited talk, text, and data. That is the best deal in America. You buy a very good Android called the Moto X for $299. Then you use the phone like any other, except most of the time you are on wi-fi instead of cellular. Thus the savings. (Read my review of Republic Wireless.)
Scratch Wireless offers a free plan that is hard to wrap your mind around. You buy a Motorola Photon Q for $269. It is a dated midrange Android. You have unlimited everything anywhere there is wi-fi, and get unlimited free texting everywhere including on cellular. If you want talk and data on the go, you can pay a daily or monthly fee. Scratch is counting on the fact that most of the time we are somewhere where there is free wi-fi.
Freedom Pop offers a freemium service. You buy any of a variety of Androids with prices all over the place (starting at around $99) and get 200 minutes, 500 texts, and 1/2 gig of data per month for free. There are a variety of paid options including unlimited talk and text for $10.99 per month.
There will be many more new innovators in 2014. Look around and take your time before you choose. And NEVER sign a 2-year contract again!
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