How to save money on your cell phone bill

Are you a typical cell phone user, wedded to a major carrier like Verizon or AT&T, locked into a two- year contract with an aging phone you can’t trade in for a new model till your term is up? Are you a smartphone user paying near or more than $100 to $130 a month?

You might want to switch to one of the many no-contract, no-credit-report prepaid carriers, and save yourself a great deal of money on your monthly bill.

Some very good no-contract, much less expensive alternatives  are  called prepaid providers. Dozens of these low- cost alternatives are comparable to the major carriers, but I have narrowed it down to the top three. The criteria was low-cost monthly plans, availability and coverage of service across the country, and selection of phones offered by these providers.

The three top companies, in order of a combination of qualities, are Boost Mobile, Virgin Mobile, and Cricket. All three run on the Sprint network (Cricket with a special roaming agreement and radio spectrum of its own), and offer 4G LTE coverage in most, but not all, parts of the country. But Sprint is aggressively building out its high speed data network, and will soon see the near total national coverage of its larger competitors. (Cricket’s parent, Leap, has just been purchased by AT&T. No immediate changes in its service or pricing structure have been announced or are expected.)

The major reason to switch is monthly costs. You can save hundreds of dollars over the two-year contract period of the major carriers by using one or the other prepaid services.

Monthly, unlimited plans from all three prepaids run about $50, in contrast to an average monthly bill of $100 or more for the major contract carriers. Also, you are not locked into a contract, you can quit or switch carriers whenever you please with no exorbitant early termination fee, and you can buy a new phone at any time. You get all this without sacrificing call quality, signal coverage or fast data pipes for downloads, streaming music or video, or uploading pictures or video.

The drawbacks

Got to be a catch, right? Indeed.

The contract carriers underwrite the cost of new phones providing a substantial discount, knowing they’ll make up the upfront loss many times over through their high monthly fees. The prepaid services, on the other hand, not only charge full list price for their phones, they usually have a much narrower selection and often don’t carry the latest models.

In other words, should you choose a prepaid service, you in most cases will be paying a couple of hundred dollars for a mid-range–read last year’s–phones. Cricket is the exception. They carry the top new models of iPhones, Samsung and HTC. Just be prepared to spend as much as $600 for unsubsidized, high end phones.

All you really need

The saving grace is that last year’s phones are capable performers in most cases, cost anywhere from about $150 to $200, and prices are falling and new models added all the time. A growing number of 4G LTE phones are available in this price range, and unless you need the raw power of the latest quad-core processors, then you’ll find many phones of surprisingly high quality within this reasonable price bracket.

Typically you can expect, at this price point, to find cell phones with dual core processors, a single gigabyte of RAM, and eight gigabytes of storage space. The newest models, in contrast, generally sport a quad core processor, two gigabytes of RAM, and 16 gigabytes of internal storage. Many of the prepaid phones, however, come with slots for the addition of micro SD cards, which can increase storage space by from 32 to 64 gigabytes.

You might even want to spring for one of the pricier, newer models offered by some of the prepaid providers when you figure you’ll save, on average, $1,200 to $1,600 over two years in monthly phone bills with the contract carriers. In other words, you’ll make up this higher front end cost after just a few months of substantially lower monthly payments with prepaids.

Competition from the bottom up

I should mention here that the competition from below, that is, from prepaid, is changing the game for the big players, who are spinning off new prepaid services under their own brand or with a new name, but none have equaled the top three prepaids in value or choice of features.

We are in a time of flux, with more people turning to prepaid, and the contract providers offering a growing assortment of plans offering lower prices, a buffet of services, rather than the traditional all you can eat for a fixed, high price; all to counter the growing popularity of prepaid.

The big carriers’ changes are mostly cosmetic, but they stubbornly resist changes to their traditional, core contract business model.

T-Mobile, which was a distant fourth behind AT&T, Verizon, and Sprint, has dropped the two-year contract model, but has replaced it with a welter of plans featuring a baffling array of varying tiers of service. (See Tim Tebow commercial)  It is so confusing in fact that the leading phone tech journalists and web sites cannot make sense of them, but one thing is certain, none match the simplicity and value of the established prepaids.

Top three

The three top prepaids offer an assortment of plans as well, including daily rates, by-the-minute rates, but since we are comparing them to the contract carriers, we will focus on the monthly, unlimited everything plans offered by each.

Boost charges $55 a month for unlimited talk, text and data. It also has a unique feature: pay your bill on time six months in a row and the price drops $5 a month, to a minimum of $40 after 18 months.

In the two years I have been with Boost, I have replaced my phone with ever more capable phones several times. My most recent purchase was of a ZTE Boost Warp 4G LTE phone, which lists for a very reasonable $199, but which I got on an online special sale price for $149.

It has a dual core 1.2 gigahertz processor, runs Android 4.12 Ice Cream Sandwich, and though it may not play the latest graphics-intensive games, it browses the web smoothly, runs streaming video without a hiccup, features a high-resolution 4.5-inch screen, and connects to all my social sites with no problems. In fact this model is described by a review in PC Magazine as outclassing similarly priced phones and approaching the popular $400 Galaxy S III in features, quality and design. I also pay just $35 a month for unlimited service. (Boost just raised its monthly charge by $5 a month; as an existing customer I was grandfathered in at the lower price.)

Virgin and the youth market

Virgin offers unlimited voice, text and data for $55 a month. You can drop this to $45 a month if you opt for 1,200 voice minutes, unlimited text and data, or $35 a month for 300 voice minutes, unlimited text and data. Virgin offers the three latest iPhones, but their unsubsidized price means you’ll pay several hundred dollars more than from the contract carriers. They don’t carry the latest Android phones, such as the HTC One or the Samsung Galaxy 4S, but they do offer the latter’s predecessor, the Galaxy S III.

Virgin also carries the latest iPhones. They are at this writing marked down 10 percent, with the iPhone 5S 16 gigabyte model selling for $495, the 32 gigabyte model for $585, and the 64 gigabyte model for a whopping $675.

Virgin offers a flexible pricing scheme for talk minutes, all with unlimited text and data, because their target market is skewed to young people, who tend to talk less and text more, as well as browse the web and make use of their social networks more frequently.

Innovative Cricket

Cricket offers unlimited everything for $50 a month as well, but adds unlimited song, ring back tones and ringtones from its Muve Music service. Unlike the other prepaid companies, Cricket does carry the most recent iPhones and Android top end phones, such as the latest Galaxy. However, most potential customers don’t want to pay $600 for a no-contract phone.

Unlimited data?

When the companies say unlimited data, they are not telling the whole story. The first 2.5 gigabytes of data may be downloaded at top speed, whether that be 4G or 3G. Anything after that will be throttled back to pokey 2G speeds. I’ve been on prepaid phones for several years, and have never reached that over-the-air limit.

If you do most of your browsing, streaming and downloading over your home WiFi network, none of that data counts toward your imposed full speed cap. Though many tech journalists criticize this cap, the fact is that all the companies do it, and some of the contract carriers actually charge you by the kilobyte for overages.

Cricket uses a patchwork combination of Sprint towers and its own rather narrow slice of allotted radio spectrum. Their 4G LTE coverage is spotty at best. Although Cricket’s network is the least extensive, in fact it is difficult in many cities to find a 4G signal on the other prepaids as well, due to their reliance on Sprint, which lags behind the others but not for long.

Also, among the major carriers Sprint has the slowest 3G and 4G speeds of the others. But it is still fast enough to stream video from YouTube or Netflix, with little or no buffering delays or stutters, downloads are reasonably speedy, and there are no dead zones, in which you can’t raise a signal at all.

Pay to play

If you must have the very latest model smartphone and can afford paying over $100 a month for the privilege, and don’t mind being locked into a two-year contract, during which time your latest and greatest phone will be superseded by even faster and more capable phones, then the traditional contract carrier is for you. Doesn’t sound all that compelling when looked at this way, does it?

If you are looking for reasonably priced, capable phones with no commitment, monthly payments a fraction of the contract carriers’, and the freedom to change phones or calling plans at any time, then prepaid is for you. As mentioned earlier, the prepaids are expanding and improving their selection of phones all the time. And the premium you pay for an unsubsidized phone is made up several times over during the two-year term of a traditional contract phone, should you decide to keep it that long.

Doing the research for what best suits your needs can be bewildering, given the wide variety of phones, prices, and calling plans. One good overall guide is the website TopTenREVIEWS, which rates the top ten prepaid services. Other good sources are the companies’ web sites themselves, which usually clearly delineate their plans and describe the phones they offer.

Do not, however, choose a phone based solely on the provider’s description. If you find a phone you’re interested in, read unbiased reviews of it on tech websites and check consumer ratings and personal experiences on Amazon, which sells the vast number of phones available from prepaid providers.

Even if you’re currently locked into a two year contract, it’s not too early to do basic research on prepaid. And to keep an eye out for especially good deals and the changing line-up of prepaid phones. You just might find a bargain you’ll want to snatch up to replace your contract phone when your term is up. In the meantime, you can use your prepaid second phone on your wireless WiFi network, without activating it with the provider and incurring charges.

I’m sold on prepaid. I’m happy with my midrange phone, and my paltry $35 a month tariff for unlimited talk, text and web. Look for explosive growth in this market, and, if convinced you’re getting a deal, prepare to jump in once you’ve shed the shackles of your traditional two-year contract.

Paul Croke

Paul Croke, former newspaper editor and longtime Washington DC area freelance writer, has loved gadgets and consumer electronics since he saw his first Dick Tracy watch. He writes about consumer technology.