Mobile // Mobile Devices
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6/1/2012
11:08 AM
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Prepaid Smartphones: Not For Everyone

Do you want a Cricket Wireless iPhone? Prepaid smartphones can save you money, but enterprise users need to weigh some important issues before going contract-free.

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Leap Wireless announced this week that its Cricket prepaid cellular service provider would offer the Apple iPhone 4 and iPhone 4S starting June 22. The devices will cost $399 and $499, respectively, and can be matched to a voice and data plan that costs only $55 per month. No contract is required, and you can cancel the service any time you want. Sounds like quite a bargain compared to the $70 to $100 monthly plans that some smartphone owners are chained to for 24 months at a time.

Before you hop on the prepaid bandwagon, however, you ought to know a few things. Prepaid plans aren't for everyone and sometimes don't make sense at all. Here are some pros and cons that business users should consider before taking aim at a contract-free life.

PROS:

No Contracts = Freedom: One of the worst aspects of any cellular phone is the contract that accompanies it. Wireless network operators typically want customers to sign a two-year service agreement in order to get special pricing on devices. Prepaid providers, such as Cricket Wireless, Boost Mobile, Virgin Mobile USA, MetroPCS, U.S. Cellular, and others, don't require contracts, which means you can drop the service at any time, for any reason.

Low-Cost Monthly Service: Prepaid services generally cost less than those offered by post-paid providers. For example, I pay AT&T about $100 per month for 450 voice minutes, unlimited messages, and 4GB of data. By way of comparison, Cricket's plan includes unlimited voice, unlimited messaging, and 2.3GB of data. I'll spend $2,400 during two years with AT&T. Staying with Cricket for two years, however, will cost just $1,320.

No Early Termination Fees: Because you're not signing a contract, you're not subject to an early termination fee, or ETF. These are fees levied by wireless network operators to discourage you from leaving a contract early. No contract means no ETF.

No Credit Checks: People looking for prepaid wireless service generally aren't subject to credit checks. That means if you're sporting a credit score of 500, you will still be able to get wireless service. National wireless providers require credit checks for anyone signing a contract. Poor credit can necessitate a significant upfront deposit that's held by the carrier.

CONS:

Limited Device Selection: Some prepaid providers offer top-of-the-line devices, but most do not. That means you might be stuck with an out-dated or basic device that's not as capable (and, let's face it, not as sexy) as what's offered by the big boys. Right now, Cricket is the only prepaid provider offering the iPhone. All the others stick to Android devices. A few prepaid providers offer BlackBerries. Even fewer offer Windows Phones.

High(er) Device Cost: The nature of contract-free service means you're going to pay a higher price for the device when you initiate service. Cricket is charging $499 for the 16GB iPhone 4S, when AT&T, Sprint, and Verizon Wireless charge $199 for the same device. Why? The post-paid service providers are subsidizing the device cost and recouping the money during the life of the service contract. Since prepaid providers can't count on you to stick around for two years, you have to pay the full (or nearly full) retail price of the hardware.

Limited Service Availability: The Cricket Wireless network does not cover the entire U.S. region. In fact, it's not nearly as expansive as the networks offered by the national carriers. Cricket does, however, have a roaming agreement with Sprint, so that Cricket customers can use Sprint's network when Cricket's own network isn't available. Many of the prepaid regional players have similar arrangements. Regional operators, in particular, can have very limited service footprints.

Aging Network Tech: While some prepaid providers, such as MetroPCS, are updating their networks to faster 4G technologies, many are still stuck using 3G. That means slower mobile broadband speeds. The four major wireless network operators have clear 4G LTE plans and are well under way with their build-outs. None of the prepaid providers is even close.

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ANON1249547663249
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ANON1249547663249,
User Rank: Apprentice
6/4/2012 | 8:10:33 PM
re: Prepaid Smartphones: Not For Everyone
Have had T-Mo for 2 years now with the $100/year for 1,000 minutes, using a then 6 month old Samsung Galaxy S that I bought off CraigsList and couldn't be happier. Everyone talks about the monthly costs of plans but many forget about the other hidden costs: carrier fees and taxes. Those alone can add another $10-$20+/month to your service. With prepay, haven't had to deal with fees and very minimal, one-time tax.
rpasea
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rpasea,
User Rank: Apprentice
6/3/2012 | 1:06:53 PM
re: Prepaid Smartphones: Not For Everyone
I use pre-paid on T-Mo and pay about $100 a year. I don't make many calls obviously and I use my unlocked iP4 mostly with free wifi (home, office and many coffee shops). Our son, on the other hand, lives on his iP4 at $50/month for unlimited voice, text and data also on T-mo. Great deal for him.

Pre-paid is the only way to go and you can buy almost any unlocked GSM phone you want online.
adef191
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adef191,
User Rank: Apprentice
6/3/2012 | 12:46:17 PM
re: Prepaid Smartphones: Not For Everyone
The notion that carriers are subsidizing phones for post paid customers is a myth that has been spread by carriers and media. It is a ripoff and rarely folks mention the reality. And because of this consumers normally think like this "Most likely I am not going to change carrier in next
2 years, so why not sign for 2 years contract and get cheaper phone" and that leads consumers to pay more. Carriers are not subsidizing phones, the truth is that they are giving the phone cheaper initially and then bundling the cost of device in monthly rate and in the end they recover much more in 2 years than what consumer would have paid, if he would have paid full price of phone. Also this leads to less competition in mobile market because consumers can not change carriers because of contract. This is sort of market manipulation by all the carriers to serve their interests. Ban the contracts and then we will see a more competitive and cheaper mobile market.

Tmobile has $60 for prepaid for unlimited talk,text and upto 2 GB of data for prepaid customers and no so called phone subsidy.

Same plan for two year contract and with phone subsidy is $80 per month. A differance of $20 per month and for 2 years costs $480 more.
worleyeoe
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worleyeoe,
User Rank: Apprentice
6/3/2012 | 12:14:08 PM
re: Prepaid Smartphones: Not For Everyone
Yes. But give me something like the Samsung Focus S. I pay $25 a month with VM USA for 300 minutes and unlimited text and web. I use my phone to text and talk 95% of the time, and I'm in no hurry to get 4G / LTE; so please VM USA get a Windows phone ASAP. Heck, I would take a Nokia 610 or 710 as well. Just do it.
pickle
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pickle,
User Rank: Apprentice
6/3/2012 | 7:55:10 AM
re: Prepaid Smartphones: Not For Everyone
Take this, i pay $55/month for unlimited talk, text, and 1gb of data AND it's VERIZON service AND i'm using an IPHONE 4s and it's PREPAID. There are lots of mvno's out there that provide great prepaid service. I use pageplus and the service is great, it's reliable and best of all, i was allowed to use my iphone. Although 1gb might not be a lot. 1gb goes a long way. I tend to have about 100 unused mb by the end of the month and i can't complain. If i were to get something similar to my plan on the "parent, verizon" service, i'd be paying roughly $120/month. Prior to this, i had simple mobile. Another great prepaid service provider who is also now supporting 4G within their service. There are lots of great prepaid service providers out there, you just have to do your research.
Charbax
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Charbax,
User Rank: Apprentice
6/3/2012 | 6:27:09 AM
re: Prepaid Smartphones: Not For Everyone
In Europe, awesome pre-paid phones are $200, 10GB data pre-paid is less than $20/month, the networks are as good as any other. Once those $200 no-contract Android super-phones arrive on markets, they take over the whole phone business, there is no more need to pay $2000 or more on a 2-year contract for a phone.
ppirtle752
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ppirtle752,
User Rank: Apprentice
6/2/2012 | 8:10:33 PM
re: Prepaid Smartphones: Not For Everyone
$55/month is still too much. Prepaid should never have a monthly fee. It should be $55 for 3GB of data to use the rest of the year as I want. If it takes me 6 months to use it, then it costs me $110/year.

That's the way prepaid should work. That's the way my prepaid voice phone from T-Mobile works. I pay them $100 for 1000 minutes, and that lasts me a whole year. Less than $10/month if you average it out.
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