Clicky

GottaBe Pre-Paid? Here Are Some Things to Consider

By  |  4 Comments

With Christmas around the corner, thrifty technophiles may be eyeing the latest smartphones and tablets but are balking at lengthy two-year service agreements that are typical in the U.S. along with the required voice and data plans.

Fret not, as there are a number of prepaid options to fit your needs, but you do have to make some choices so be prepared to weigh your opportunity costs and what you’re willing to settle on.

1. The Opportunity Costs of Devices

For a lot of large name providers–like AT&T, Verizon, and T-Mobile USA–going prepaid will limit the number, and types, of prepaid devices that are available to you. And it’s true in the past going prepaid means being slapped with a device that’s the technological equivalent of a dinosaur, but today you have more options, especially if you go prepaid with a GSM service provider like AT&T and T-Mobile, or an MVNO that relies on GSM technology, like Simple Mobile. That means you can BYO-Device to the network, pop in a SIM card, and make your monthly payments to keep your service active.

Virgin-Mobile-USA-Launches-Samsung-GALAXY-S-II-4G

Still, even if you do get this option, lust-worthy smartphones will cost more since you won’t get any subsidies. There are a number of more price-conscious devices, which typically are high-end smartphones from last year that’s been discounted this year for newer devices. While you’ll still be paying full-price without subsidies for these devices, they will be more affordable. Think Galaxy S II, or even LG Nitro HD, which are both fine phones and will still offer you great performance. What you gain in price you’ll sacrifice in the latest number of CPU cores and the latest available mobile OS, but these phones will still do the trick, especially since you can download apps to make up for any inadequacies, such as a panoramic camera app that’s not present in older versions of the Android OS natively.

2. Getting Your Device

Word of warning–before you begin the shopping process for your favorite device, make sure to ask about the ESN or serial number of the phone. Once you have that from the seller–if you’re buying a used phone or a new phone–you should call your carrier and verify that the ESN is valid and not blacklisted. Blacklisted phones may not work as U.S. carriers are starting to enforce this so that stolen phones will become worthless.

If you’re with a CDMA provider in the U.S., like with Verizon Wireless or Sprint’s wholly owned brands such as Virgin Mobile USA or Boost Mobile, you may have little options as to what devices you can use with those services. Typically, you’re limited to Verizon’s prepaid, Boost’s, or Virgin’s portfolio.Thankfully, though, Sprint has been giving good hand-me-down phones to its prepaid brands so you can find great devices, like last year’s HTC EVO 3D or the Galaxy S II on those prepaid brands. Even the iPhone is available via Sprint’s prepaid brands.

CDMA users should also note that a Verizon post-paid smartphone may not work with a prepaid plan just as a Sprint smartphone may not work on Sprint-owned Boost Mobile. If you have a phone in mind, check with the carrier to see if they’ll support it, especially if it’s not originally from that prepaid carrier’s own portfolio of devices.

For GSM users, you’ll have a more bountiful selection, including any device on AT&T and T-Mobile as well as international unlocked GSM handsets. It really depends what you’re looking to pay for this privilege. If you’re looking to score an iPhone 5, you should expect to cough up more dough than if you’re willing to get a mid-range handset, like a Galaxy S or last year’s Galaxy S II. Regardless, you’ll have a lot of selection to choose from, and so you should bargain shop for the best deals.

For selective shoppers who want the latest and greatest and don’t mind shelling out the extra cash, importers are usually a good place for the hottest technology. Visit sites like Clove UK or Expansys-USA for phones. Typically, a lot of manufacturers–including Samsung, the crowned king of Android handsets–release their smartphones first overseas before making them available in the U.S. for various carriers. As a pre-paid customer, you don’t need to wait for AT&T, T-Mobile, or any other provider to test and validate the handsets–just import, pop a SIM, and use.

Screen Shot 2012-11-28 at 12.40.26 AM

For bargainistas, you can try any number of outlets, including eBay, Craigslist, Amazon, and even local carrier websites for any deals on non-contract pricing. AT&T may have slight discounts for refurbished iPhone and Android smartphones, but you’re better off shopping on your own as those discounts are meager. If you’re an Apple loyalist, try Apple though unlocked iPhones are released far later than the carrier-locked models, especially if you want the latest iPhone. And when you’re shopping through community sites like Craigslist, make sure to be aware and not get scammed.

If you’re looking at GSM handsets, you may want to consider shopping for a 4G LTE Verizon smartphone. That’s right, Verizon, while known in the U.S. to be a CDMA carrier, does offer world phone and many of its recent LTE smartphones are SIM-unlocked. Check with Verizon to see if the phone you’re interested in is a world phone with quad-band GSM radio. Devices like the iPhone 5, HTC Droid DNA, and the Motorola Droid RAZR HD are all unlocked and compatible with AT&T’s 4G HSPA+ network.

Also, be sure to inquire about warranties–if the device is still under warranty if it’s used and what the warranty period is–as well as what the return period is.

3. The ‘Friends and Family’ Discount, AKA Hand-Me-Downs

If you have a technophile friend, then chances are they’ll upgrade frequently and you can either beg to take their old phones off their hands or buy one from them cheaply. Editors like Josh and Xavier typically go through phones quickly, and as they upgrade more frequently than the average Americans, their phones are typically newer and have fairly recently technologies. If you know a Josh or Xavier in your life, ping them and see if they’ll sell you their old phones or give you their aging technologies, and if you don’t…meet our own Josh Smith! On a serious note, having a technophile in your life can also be handy for free technical support, and tips like how to get unshackled with a prepaid smartphone and plan for the holidays.

4. Unlocking Your Phone

This really applies only to GSM people as CDMA handsets cannot be unlocked and are typically only compatible for the network they were designed for. That said, if you buy a device that has already been unlocked, you can skip this step. Otherwise, if you buy a T-Mobile phone and want to get it to work on AT&T, you’ll have to get it unlocked first.

There are a number of ways to getting a device unlocked. The first is to have the seller of the phone do it themselves before selling you the device. Typically, if you have an account in good standing–meaning bills paid on time with a post-paid account–for at least 90 days, most carriers will unlock the handset if you tell them you may need to use the phone abroad while traveling and don’t want to incur roaming charges. While you can’t call AT&T and T-Mobile to do it yourself unless you have a good standing post-paid account, your seller can, and you should have them do it if possible. Then, once you meet them to get the phone, pop in your prepaid SIM if you have one ready at that time to test to see if it was properly unlocked, else you may need to do it yourself.

Screen Shot 2012-11-28 at 12.42.19 AM

And to do it yourself may cost anywhere on average between $15 and $50 depending on what service you use. You can try a local cellular phone shop–not a carrier-branded one–or go through an Internet site to unlock your phone. You’ll need to provide these people the device’s IMEI number, which is like a serial number, and they’ll in turn give you a code and instructions to punch the code into your phone to unlock. I’ve used CellUnlocker.net in the past and have been extremely satisfied with their service in unlocking an iPhone 5 and iPhone 4S (AT&T model) to use with T-Mobile USA.

5. 3G, 4G, Do All These G’s Matter?

If you’re looking to maximize the use of your smartphone, chances are these G’s will definitely matter. Most likely, an international unlocked handset will be compatible on AT&T’s 3G or 4G HSPA+ network. That means you can expect average download speeds between 1-3 Mbps in most areas. T-Mobile uses a different frequency so chances are these phones are not compatible with T-Mobile’s broadband-equivalent network, meaning you’ll get dial-up speeds. You’ll need what is called a penta-band phone to work on T-Mobile’s 4G HSPA+ network.

iphone_t-mobileIn select areas, T-Mobile is lighting up the 1900 MHz spectrum, though that’s more limited. This means that in these areas, you’ll be able to use unlocked AT&T and AT&T-compatible 3G/4G HSPA+ devices on HSPA+ 4G speeds on T-Mobile.

So 3G/4G network compatibility essentially gives you a broadband Internet connection speed on your mobile phone. Typically, the more the G’s, the faster the speeds. Right now, 4G is the fastest, and HSPA+ is a 4G technology that’s still slightly slower compared to LTE, which is most often only available to contract customers. Additionally, having 3G/4G access will also allow you to make a call and surf the web at the same time.

If you’re on T-Mobile’s network for prepaid, you’ll likely want to either stick to a T-Mobile phone, a penta-band unlocked Nokia phone, or any one of the newer Nexus smartphones from Google to be safe.

6. What Pre-Paid Service Provider Should I Get?

That really depends on who has the best coverage in your area. There are many pre-paid services that operate like an MVNO. This means that they don’t operate a network or have an infrastructure of antennas and fiber, but rather piggyback on a larger network, like that of AT&T’s or Sprint’s, to deliver service. They buy service wholesale from these larger national carriers and sell them at a discount to attract customers. So even if you go with a smaller brand like one of these MVNOs, you can still get the coverage equivalent of a larger national service provider like AT&T or T-Mobile.

This is the case with Simple Mobile, which buys minutes and data from T-Mobile and sell it to customers. Sprint also extends its network to other MVNOs, like Ting, which is owned by Tucows. The unique thing about Sprint is that it will allow MVNOs to offer 4G LTE coverage as well whereas AT&T and others are limiting 4G LTE access to their own post-paid customers. That said, Sprint’s LTE footprint is still small and likely prepaid LTE devices won’t be widespread until another year or two at least.

7. Catch-22 With Unlimited Data

Smartphone users are among the most heavy data users of any mobile network, which isn’t a bad thing considering you have the power of the full web at your fingertips–literally–with a capable browser and a multitude of apps. Many prepaid providers will target you and advertise unlimited data, but there are some hidden catches even if they aren’t outlined in advertising or fine print. Networks like Simple Mobile, which operates off of T-Mobile, advertise unlimited, but if you’re a data hoard, you’ll get a warning before being thrown off the network all together.

sprint-unlimited-data

Many pre-paid providers are not up front about what constitutes fair use and when or if you’ll be kicked off. A good resource is Howard Forums, a community of Internet users who discuss prepaid and post-paid services. Check what other users have said about any provider and see if you can live with any of the catch 22 consequences.

T-Mobile does offer unlimited plans as well, such as the $30 plan with 100 voice minutes, unlimited SMS, and unlimited web. The catch here is that only the first 5 GB of web usage is on 3G/4G speeds. After 5 GB, you’ll be throttled down to EDGE or 2G speeds and will suffer from the slowness known as dial-up.

It should also be noted that while Sprint offers unlimited, unthrottled data for its contract customers, Sprint’s prepaid brands throttle you down after a certain amount of usage per month, usually around 2.5 GB.

8. Overages

While on paper, a prepaid plan may be cost-efficient, but also be prepared to pay more if you go over any plan. Have a teenager who yaps or texts a lot? Well, be sure that the plan you’re subscribing your rebelling youngster to will fit their needs, else with overages, you may be better off paying for a post-paid plan that gives you more for the same money in exchange for two years of loyalty at a time. For example, AT&T offers a pre-paid smartphone plan for $65 per month that includes 1 GB of data. If you use more than that, be prepared to pay extra.

Another thing to consider is that some carriers have two separate plans–one for smartphones and a cheaper one for non-smartphones. AT&T has a cheaper non-smartphone plan that includes unlimited data. The reason being is that smartphone users use more, so carriers justify it by charging these ‘pro’ users more. It may not be fair, but that’s the nature of the beast.

You can manage your use in a number of ways, and some providers give you apps and online tools to monitor how much voice, SMS, and data you’ve consumed month-to-date.

9. Expiring Minutes

For non-smartphone users who may use their phone once a every few weeks, a danger you should watch out for is that if you don’t re-load your account within a period of time–usually 90 days–you will lose your minutes. Check with the prepaid provider of your choice to see what the terms are and how much you’ll need to load to maintain minutes you’ve previously bought. This generally only applies to non-smartphone owners, but I figured I’d mention it in case.

10. What You’ll Give Up

Going pre-paid means you’ll forego contracts, paper statements and bills, and ideally an expensive plan for voice, data and SMS each month. These all sound good, but you may be giving up other things too. Some providers do not offer wireless insurance for prepaid plans. This means drop your phone, take a bath with your phone, leave your smartphone at a bar, or get mugged with your phone (heaven forbid), you’ll have to repeat steps 1 through 4 from this guide again. Post-paid customers can pay a small fee–usually less than $10 per month–for wireless device coverage and a deductible–up to $200 per incident–if they damage or lose their phones or have their devices stolen. Many providers team up with Asurion and some prepaid providers will offer insurance. You can inquire and be sure to check out the terms to see if they cover accidental damage (like water!), theft, or loss. Also ask what the monthly rate would be and any deductible.

There may be more advanced features you’ll be sacrificing as well. The ability to tether would be gone for most prepaid providers, meaning you can’t get your laptop onto the Internet via your phone’s modem while on the go. Some providers offer this, but you’ll be burning through your data quickly and then you’ll be throttled.

There are also app store billing conveniences you’ll forego. On Android devices, you can pay for app and music purchases, for example, by having those charges billed to your cell phone bill rather than paying with a credit card. You’ll likely forego this convenience with prepay. On this one, it’s a small sacrifice considering you’ll be unshackled and hopefully gain a cheaper phone bill anyways.

And you’ll likely give up 4G LTE coverage. For those who have not experienced LTE, it’s no big deal, especially if you have good WiMax (via Sprint’s pre-paid brands) or HSPA+ coverage. However, LTE offers super fast data speeds that rival high-end DSL speeds or even cable modem speeds. Sprint is allowing MVNOs to tap into its LTE network, but Sprint’s LTE footprint is small despite its forward-thinking with the prepaid market.

You win some, you lose some. It all boils down to what opportunity costs you’re willing to make, what sacrifices you can live with, and how much you want to reduce your monthly phone bill.

 

Tech enthusiast in Silicon Valley enjoying the possibilities of ubiquitous connectivity, information sharing, and collaboration enabled by mobile broadband. You can contact Chuong on Twitter @chuongvision or search +chuongvision on Google+.

4 Comments

  1. C.

    11/28/2012 at 7:33 am

    Thanks, I really appreciate all the info in this article. I’ve been looking into prepaid smartphones and this will be really helpful to me.

    C.

  2. PrepaidWirelessGuy

    11/28/2012 at 8:52 am

    2 Points:
    1. Tethering is now widely available prepaid: http://www.prepaid-wireless-guide.com/tethering.html

    2. Insurance on postpaid is not a good deal. If you’re going prepaid, you understand the economics of total cost of ownership, so while you pay more upfront for the same phone, you pay less per month for your plan. With a $200 deductible, insurance is useless except for the severely cashed strapped that couldn’t afford to replace their phone for $300-$500. When I was on postpaid I used the insurance, which made sense when the deductible was $50. When that got hiked up when smartphones started to proliferate, insurance became a feckless feature for the weak of heart.

  3. Boost Android User

    11/28/2012 at 12:18 pm

    I have always had prepaid. Now more then ever today I’m glad I did.
    $35 a month unlimited talk & data plus turn by turn GPS

  4. Stalyn

    11/28/2012 at 5:19 pm

    Great article. I personally think mobile will be the future of the industry.

Leave a Reply