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 began 15 years ago. Plans and services are morphing in many different directions at once. That makes saving money more complicated and requires you to decide what compromises you are willing to live with to save money.
Find the best deal on mobile and cell service
Cell phone service can now be divided into 3 types: The Big Four, discounters, and innovators.
The "Big Four" Mobile providers
- 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 three get by with half a Gigabyte. That makes the bill for 5 lines $150 per month, or $30 each line.
T-Mobile will pay termination fees for you if you leave any contract carrier and come to them.
Meanwhile, T-Mobile has cut prices on its sub-brand called GoSmartMobile.com. For $25 a month, GoSmartMobile customers get unlimited talk and text and unlimited Facebook at 4G speeds. At $35 a month, you get unlimited talk, text, Facebook, and 500 MBs of data a month. And for $40 a month, you get all that and 3 GBs of data in total, which would meet the needs of the vast majority of smartphone users.
- AT&T has suffered the most lost customers to T-Mobile, as both companies use the same technology called GSM, and T-Mobile is paying 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.
Meanwhile, AT&T also has a new discount brand of cell service now that they've bought Cricket. The pricing starts at $35 a month and go up to $55 a month depending on how much data you use.
- 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. Sprint Framily now has a tie-in with Spotify for a deluxe music service at $5 a month. That's a real deal for musicaholics.
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. Now comes more damning news for Verizon; they're reportedly collecting info on all your online habits and selling it to marketers to feed ads to you.
If you're intent on staying with any of the Big 4, take a look at WhistleOut.com. The site makes it easy for you to find the best plan to meet your needs with a free comparison shopping tool.
The discounters have grown their customer bases by big amounts in the last few years. However, I don't expect much growth unless they cut rates again.
- Straight Talk charges around $45 per month for unlimited talk and text with 3 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 or a decent phone called the Moto G for $149. Then you use the phone like any other, except most of the time you are on wi-fi instead of cellular. Thus the savings. (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 Gigabyte of data per month for free. There are a variety of paid options including unlimited talk and text for $10.99 per month, and $20 a month for unlimited talk and text with 1 GB of high-speed data. Meanwhile, you can now use the iPhone on Freedom Pop. See their website for details.
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!
For further reading: