Weekend Computer Update: Interesting times to be a cell phone user

Computers and tablets have been really exciting topics, but now we have a real cell phone war going on in this country. You can recall that I shared how T-Mobile is causing this war, but the whole industry is responding. I have also honed my analysis of this situation, to simply it for you. ….

The major theme: Separating the purchase of the cell phone from the monthly service.
Note: This is how its done in the rest of the world. People do not agree to buy a cell phone on a two year contract and then pay a really high monthly rate. They buy their cell phone (online, from an electronics store, or a cellular company store) and then they sign up for their plan. It’s two separate transactions.

U.S. carriers have finally caught up to this way of thinking. However, it means you will need to also become a believer if you want to reap the savings. The iPhone is not a $200 phone. It is a $650 phone that is being subsidized for you through you signing that two year contract. If you break the contract, there is a $350 penalty. The Samsung Galaxy S5 and Galaxy Note 3 (iPhone’s chief rivals) are $700 to $750 at full cost.

T-Mobile shook things up in early 2013. They went with a new campaign called “UnCarrier.” T-Mobile said that they would not longer sell cell phones on contract. You can buy your phone on eBay, or Amazon, or directly from Google or Motorola or Apple. You can buy a phone at full price from T-Mobile or finance it into interest free payments from them. They don’t care. The phone is separate from the service. Late last year, AT&T caught on and as January rolled around, they eclipsed T-Mobile for a short while.

ATT began offering 4 lines of smartphone service, with 10 gigabytes of data (a real family plan) for $160. There was one simple requirement: NO MORE CONTRACTS. You could already be on a contract (6 months in to a current contract–  minimum) but you had to agree to NEVER BUY ANOTHER PHONE ON CONTRACT AGAIN. Of course, you could buy an unlocked phone from any of the sources I mentioned in the previous paragraph, at full price from ATT or financed through them. Essentially, ATT offered a base price of $130 for 2 lines, with line 3 and 4 at $15 each.

T-Mobile and ATT are interoperable, which is why they are often mentioned in the same sentence or in marketing rivalries. You can generally use an unlocked T-Mobile phone on ATT and vice versa. Verizon uses an entirely different technology so their phones typically will not work on ATT and T-Mobile.  Just last week, T-Mobile fired back at ATT and began offering a 4 line, 10 gigabyte family plan for $100 a month. I think you are following along by now.  This deal involves not buying a cell phone on contract. It’s a 4-line plan. There are no discounts, to my knowledge, if you only want 3 lines.

You may have heard it here first, but I am branding Verizon “The Rolls Royce of cell phone carriers”. Full disclosure: I am a Verizon customer and I don’t plan on changing any time soon. Their prices are ridiculous, but they justify them by consistently having the highest customer satisfaction and BEING THE ONLY MAJOR US CARRIER TO OWN THEIR OWN TOWERS. That’s right! ATT and TMobile’s towers are owned by 3rd parties. Even though Verizon could easily sell their towers for $5 to $10 billion ; they haven’t done so yet for the sake of quality.

To get a 4 line smartphone family plan on Verizon with 10 GB of data is $260 per month!! Some clients have told me that they were able to get a $10 to $25 per line monthly discount on Verizon by signing up for their Verizon EDGE program. This is true, BUT there is a catch! If all four people on your plan purchased their phones through Verizon’s “no-contract” EDGE plan, you would get the same $160 monthly price as ATT. The catch is, you MUST finance your phone through Verizon. You cannot buy a $300 Verizon phone directly from Motorola, buy a full price iPhone directly from Apple, or buy the iPhone off of your nephew that is off to college (and needs a few bucks) — activate it on Verizon and save on the monthly bill using the EDGE program.  For the EDGE “discount” program to work, Verizon has to provide your phone.

Therefore, Verizon’s EDGE program is a gimmick compared to ATT or T-Mobiles phone financing program and their low monthly prices (which allow you to bring an independently obtained phone to the table). My bottom line: if you love Verizon, then keep using them. However, don’t think that you will TRULY save money compared to the competition by using them.

Finally: I know several my computer students (clients) have very basic cell phone needs. Perhaps you just want a basic phone or want a simple smart phone for first time use. I have plans in mind for you. They are pre-paid plans and can be as low as $80 a year or $12 a month for basic phones  and $30 a month for a smart phone — no contracts, no gimmicks, no joking around.