Does the $199 smartphone upgrade make sense anymore? (it never did for me)

Discussion in 'Travel Technology' started by LIH Prem, Sep 28, 2014.  |  Print Topic

  1. LIH Prem
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    LIH Prem Gold Member

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    Ed Bott got into a bit of twitfest with me over his article about how nobody is really getting a smartphone for $199 *anymore*. My contention was that nobody ever was, that in just about every case it's cheaper to pay for your phone outright and get a plan where they don't need to recoup the $450 subsidy over the life of your contract and keep you locked in with a sim-locked phone until your contract is up.

    Though a lot of people seem to be locked into to older unlimited data plans, new people need to beware of the new pricing plans on contracts. It's now even more evident that paying for your own phone, be it by a 0% interest installment plan through your carrier or on your own is almost certainly going to be better for the long term.

    I have friends that feel they are locked into AT&T because their old plans are unlimited high speed data with supposedly no caps. I think they pay around $80 per month (the base runs around $80 per month, but with corp discounts and then all the taxes and fees added back in they still pay around $80 per month. On top of that, they pay $10 or $20 extra per month for the spouses smartphone data plan and some amount extra per month for the 2nd line on the account. All in all, they are not getting a bad deal, but when you add up even just $80 per month for 24 months, they are paying a staggering amount for the convenience of carrying around a smartphone with the convenience of a data plan. It's even more expensive for new phones on the new AT&T contract plans. Verizon was always priced higher than AT&T, and at the time I looked, even with corp discounts, an unlimited VZW plan was going to cost around $100 per month. No idea what it is now, but I'm sure it's at least that if you go with a contract smartphone plan including a subsidized phone from VZW.

    The iphone 6 I just bought is my 4th smartphone, the 1st two (iphone 3g and iphone 4) had no data plans. My plan then was wifi only for data or a free freedompop 3g/4g hotspot or similar device for a limited amount of free data and the $100 per year t-mobile to go prepaid voice only plan. I never or rarely used the 1000 minutes that $100 refill bought me, so I would end up topping up once per year for $100, with a net cost of around $8+ per month. When you top up that way, the unused minutes carry forward.

    Finally t-mobile had their merger with AT&T fall apart and they changed directions, gained a ton of money and spectrum from the failed merger and at the same time, Apple started producing a version of the iphone (I think 5 was the first?) that included the hspa+ bands that t-mobile was using. More important than that, they gained spectrum and aggressively rolled out hspa+ (basically 4g data) and LTE across their network in a very short period of time. So shortly after the iphone 5s came out, I noticed their coverage map now included my home area at 4G speeds (more recently upgraded to LTE) I paid full freight ($649) and converted to the t-mobile/walmart online-only $30 per month pre-paid plan.

    ios8 and the iphone 6 adds wifi calling to the mix, which is already active/working on t-mobile. Supposedly voice minutes on the $30 monthly plan during wifi calls still count towards your monthly allowance, but the main point is that wifi calling extends the range of the network.

    This plan is not for everybody, it only includes 100 minutes per month, unlimited international text messages, and unlimited data, with the first 5GB high speed. After 5GB, your data rate is throttled. Unlike their other public plans that start at $50 per month, the $40 per month starter plan and the $30 per month online-only plan does not include international 2g data roaming and cheap international voice roaming rates. Also t-mobile's network is not as extensive as AT&Ts, but it has improved vastly over the last 2 years. Obviously if you need unlimited voice, then you need to move up to a more expensive plan, this isn't the plan for you. I would still encourage you to test drive t-mobile's network to see if it works for you because their pre-paid no contract plans tend to be vastly cheaper than the others.

    BTW, when I say $30 per month, that is what I'm paying. It's $30 per month plus sales tax (in Hawaii, 4.166% GET). So it's $31.xx each month. There are no other fees. You set it up so they debit your points earning credit card monthly, you pick the number of days before the plan renews.

    Moving forward brings a lot of uncertainty. Softbank (the company that owns Sprint) is trying to acquire T-mo USA, and there's no guarantee that this plan will continue to exist. For now, it's the El Cheapo plan of choice :)

    -David
     
    Last edited: Sep 28, 2014
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  2. LIH Prem
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    LIH Prem Gold Member

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    Some things to know ...

    1. The $30 monthly plan can only be bought/activated online, with the caveat for new activations only. You can still do it if you have t-mobile already, just carefully. (Activate new, then call them to port over your existing number to it, assuming you are off contract.)

    2. If you buy your phone from t-mobile, even if you pay the full unsubsidized price, the phone comes locked. You can get it unlocked if you meet certain conditions (you can search for them). But you are better off buying the contract free t-mobile iPhone from Apple, which is delivered with a t-mobile nano sim and factory unlocked.

    3. Unlike previous versions of the iPhone, the 6 and 6+ GSM models are unified, there's only one version that has all the bands used in common by AT&T and T-mobile.

    -David
     
    Last edited: Sep 28, 2014
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  3. iolaire
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    iolaire Gold Member

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    I have no problem paying list price for an apple product, but I've never been able to justify the data prices (and don't use voice). I'm also a freedompop user so I was VERY excited when they finally started offering the iPhone via their phone program. The first day it was offered I ordered the iPhone 5 from them and its been perfect. I have a 1 gig of data for free, 500 megs base, plus 500 megs from freedom friends via slick deals. Supposedly the phones were refurbished, but they are not, and my battery has not held a charge good, but recently Apple started replacing defective iPhone 5 batteries so last night I went and got a free replacement battery - so far the charge seems much better. The texting sees sort of slow, and the voice has worked when I used it, but I expect the VOIP service is not the best - but the data is data and works...

    So yes monthly fees add up, but I highly recommend FreedomPop with the iPhone 5 as a data device.

    Note I also had the HTC phone from Freedompop and it sucked overall - not recommended at all for a bad battery and very slow UI...
     
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  4. mattsteg
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    mattsteg Gold Member

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    If you want to raise a "for most people" sort of argument, you probably need to move away from esoteric corner-case use patterns. There are other good prepaid options as well, but the plan you cite is pretty specific.
     
  5. LIH Prem
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    LIH Prem Gold Member

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    I didn't think I was making an argument for anybody, let alone "most people".

    The point I was trying to make is that you should look at the total price of whichever option you are using to fund a smartphone and look at other options as well, regardless of the device or the carrier. including all fees that they seem to be piling on to these plans now. Nobody is really just paying $199 for their device, and they certainly don't make it very easy to compare price and features.

    That t-mo plan $30 unlimited plan is the one I use. I don't really see it as an esoteric corner-case, nonetheless it's just one example.

    -David
     
  6. dayone
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    dayone Silver Member

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    If you get a healthy corporate discount from either T or VZ, a two-year contract still makes sense.
     
  7. estnet
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    estnet Gold Member

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    I, too used the prepaid plan (tmo) for a few years as I didn't need a lot of talk time, but that all changed when they started the free roaming for data in many countries since I travel overseas a lot and I must say it is really worth it for me just for not getting lost (google map telling me when I'm walking in the wrong direction, etc), being able to access data when out and about for restaurant info, etc. So I got rid of my landline and for about $20 more than I was paying for limited landline without long distance I now have unlimited phone in the US, no need for separate gps in my car plus data in most of the countries I visit.
    The whole "getting something for nothing" is/was just a scam for making you pay over time and tying you to a service you may not want for two years.
     
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  8. LIH Prem
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    LIH Prem Gold Member

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    the corporate discounts amount to about a 15% discount, but then the fees and taxes and up adding about 10 - 15% back on to the monthly bills. Still cheaper than no discount, but I think you still need to do the math on the total price of the device plus the contract over 2 years.

    The wireless companies aren't giving anything away. They make their money back over the life of the contract and you end up with a locked phone during the life of the contract so your options overseas are limited if just using that phone. (except for VZW that has to offer unlocked phones because of the spectrum deal they made.)

    -David
     
  9. dayone
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    dayone Silver Member

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    My company's T discount is 21% and I know that others go as high as at least 25%. My math is fine.

    Only T's iPhones are locked for the life of the contract. Sprint will unlock its iPhones after 3 months and you already noted that VZ iPhones are unlocked. TMUS no longer sells subsidized iPhones.
     
  10. Tenmoc
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    Tenmoc Gold Member

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    Couple of points.

    That you say to get an iPhone I find humorous. It has its place but for the masses it is not and never will be again a majority item. For years now some had been making phone and features that are 2-4 years old to the rest of the world.

    The T-Mobile $30 100m ul-text ul-data can be purchased in Walmart.

    T-Mobile unlocks phones over they're paid for. Nothing wrong with that.

    T-Mobile does not have contracts.

    A contact for mobile service plays on folks not knowing. The cost of that phone subsidy is more than baked into service contract prices. If the network works for you, stay away from vz and att.
     
  11. LIH Prem
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    LIH Prem Gold Member

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    ??? How did you reach that conclusion?

    I didn't tell anybody to do anything or switch their plans or whatever. I simply wrote about smartphone plan pricing, the point being that if you haven't done it you should think about the total cost of your phone + plan that you will pay over the life of the contract if you buy a subsidized smartphone.

    Since I have an iPhone on the t-mobile $30 per month plan, that's what I wrote about. But it's just an example. That plan works with any smartphone and there are other plans that are surely better for other people. Maybe some of them are better than the plan they currently have if they forgo the subsidy and pay for the phone themselves, either up-front or over time.

    -David
     
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  12. daninstl

    daninstl Gold Member

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    I have an iPhone 5S with Virgin mobile. I get 1,000 minutes and unlimited data and text (although I'm sure there is a usage cap I don't hit). I pay $40 per month but I did have to buy the phone for $199 I think 6 months ago. It runs on the Sprint network so it could be more vast but it has worked very well for me. I've had my kids on Virgin for years and pay from $25 to $35 for each of them on various smart phones. There is a down side with any plan or provider I'm sure. For example I don't have tethering turned on because it cost $5 more per month and I use my wife's corporate iPhone for some. I can make wifi calls through Google voice and several other apps when overseas. I'll upgrade to the iPhone 6 eventually but not in a hurry at this point.
     
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