... How I Learned to Love a Monthly Prepaid Mobile Phone Service

My phone is a Nexus 4.  The joys difficulties of purchasing this device have been described in a previous post.  If you prefer to relive some of the highlights in all of its auditory and visual glory, feel free to numb your mind with this:

There is a reason I went through all of this hassel ... I was tired of paying a butt-load significant amount of money to Verizon Wireless each month.

My Verizon Bill

My wife and I shared a plan that included data for each of our smartphones.  The total was about $174 a month, or over the course of a two-year contract, a grand total of about $4,160.  I don't call that many people; why was I spending this much money?  I'm a teacher; how could I afford to pay this much money?

Recently there has been a lot of buzz about getting away from mobile phone contracts and going the prepaid route.  Even +TIME ran an article this past summer.  I researched a number of options, from MetroPCS, to  Straight Talk, to Ting.  Every plan has its pros and cons, most notably being network coverage.  If you are thinking about making this switch, look in to how good the networks are in the area(s) you will be using your smartphone.

The best options for me came from T-Mobile's Monthly 4G plans.  (If you are interested in getting the most out of these plans,  +Josh Estelle and +Yew Jin Lim directed me to this blog post.)  I was attracted to the $30/month plan:

From: http://prepaid-phones.t-mobile.com/monthly-4g-plans

And for my wife, I liked this plan.

From: http://prepaid-phones.t-mobile.com/monthly-4g-plans

I seldom go over a 100 minutes of voice in a month, and my wife does not use nearly as much data as I do, so being potentially throttled after 2GB would not be an issue for her.

So here's the math. At a total of $90 a month, we would be saving $84 a month from what we were paying Verizon.  That comes out to us paying $2160 over the course of a typical two-year contract, or an overall savings of $2000!

Making the switch was an obvious choice once I put down my calculator.  I still harbored some hesitations, however.  First, we still had six months left on my contract.  Canceling our service with Verizon would cost us an early termination fee on each of our two lines, totaling about $300.  If you look at the $84/month potential savings pushed over the six months remaining on my contract, it is still a good deal.

My second, and bigger concern, was the need to pay full price for a smart phone when going into a prepaid plan.  This is why AT&T and Verizon contracts look so enticing.  They subsidize the cost of phones, so they only charge you $200 for an iPhone or Galaxy S3 that would otherwise cost $700+ off-contract.  When expanded over the cost of two phones, they are offering a savings of over $1000 for premium devices.  If you want a lesser smartphone, well they are almost giving those away.  It is not until you consider how much AT&T and Verizon are overcharging for their actual service before you understand why they will sell you the phones for such an attractive price.  They are making up for their costs (and much more) in the end.

I like my toys, so I knew I needed to buy high-end phones if I were to be happy with any changes.  The thought of shelling out $1400+ so that we could make the switch to T-Mobile was not very appealing, even though my calculator assured me that we would be saving money in the end.  When Google announced that they would be selling their Nexus 4 phone for $350 (16GB version), my sticker shock at buying two new phones went away.  I could buy two Nexi (Nexuss? Nexuses? Nexusus? Nexum?) for the cost of one iPhone5 or S3.  This sealed the deal.  I won't argue that a Nexus is as good of a phone as either of those two devices, but I dare you to tell me that either an iPhone or an S3 are worth twice as much as a Nexus 4.

So I made the jump!  Here is the money comparison of how much we would pay if we bought two new phones and stayed with Verizon, versus getting the two Nexus 4s and going with the T-Mobile prepaid plans.

Click to make larger.

So I'm happy with saving our household about $1400 over the course of the next two years.  My next step is to get my wife off of the $60/month plan and switch her to the $30/month plan I use.  As I mentioned before, 100 minutes of talk time is not a concern for me.

My T-Mobile Account Activity

I am almost half-way through my first month, and I have only used twenty nine twenty-nine minutes of talk, and that was during the holidays!  My wife does spend more time on the phone, but is still very reasonable.  Her use is usually between 150-300 minutes a month.  T-Mobile charges ten cents per minute of overage.  So if she goes on the 100 minute plan, she could get charged $20 of overage fees on her chattiest of months, or a savings of $10 per month of what she is now paying on her unlimited talk plan with T-Mobile.  So next month, we will be cutting even more off our mobile phone bills.

My final piece of information comes for those who have gripes about the Nexus 4.  Yes, it's internal storage is capped at 16GB.  That seems to really affect those that play a number of different games on their devices.  With the amount of high speed data I can access each month, cloud storage of documents, pictures, music, and movies works great for me.  I've even pinned about six gigs of music onto my phone so that I won't be streaming my favorite playlists while navigating, and there is still a great deal of room left over.  I guess if you need to have Madden, FIFA, and GTA on your phone, then you need a different device.

You are correct if you think that the Nexus 4 does not get an LTE signal (what Verizon and AT&T call 4G).  The HSPA+ signal I get from T-Mobile is plenty fast enough for me, and it beats the pants off the 3G signal I got off my old Verizon phone.  I just set my personal record with 14.4mbps down and 3.7mbps up (admittedly at a very off-peak hour).

If you have no idea what those numbers mean, you can see from the picture above that the top speed test of my phone taken from T-Mobile's wireless signal are not far off the bottom set of numbers on my list, taken from my Comcast wifi router.  You will just have to trust me when I state that these tests were all taken from inside my apartment, and at a distance of about ten feet from my wireless router.

So let me conclude this very lengthy post by stating this: you are probably paying too much for your smartphone service.  Do some research into monthly, prepaid plans and check how good the service is in your area from a variety of different providers.  Check into the costs of unlocked and unsubsidized phones or see if your current phone can be or is already unlocked.  Finally, check to see how much it will cost you to break your current contract.  My guess is that the numbers add up if you are willing to make a switch.

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Updated 12/29/2012, 14:28EST