The New Math on Smartphone Plans & Providers

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Soon, you’ll be able to use an iPhone for as little as $30 per month. Alternately, your iPhone could lock you into a contract that costs upwards of $140 monthly. A new lineup of shared family plans from Verizon might run far more than that. Considering the huge range in prices, as well as the recent changes in plans and providers in the marketplace, it’s time to at least start thinking about switching wireless services.

Over the years, as new mobile phones have regularly hit the marketplace and providers have periodically tweaked their plans and pricing, one thing has remained constant: A decent chunk of consumers has been overpaying for plans they don’t really need. Perhaps, after months or even years of paying too much, they’ll catch on and switch to cheaper plans that makes more sense for their needs. Soon after that happens, though, the offerings for handsets and plans will inevitably change, forcing the consumer to reevaluate the options yet again. Or, at least until their patience wears thin, they’ll just stick with their latest plan, even if they’re overpaying.

Lately, many consumers have realized that they aren’t using as many voice minutes as they used to, and that a pricey plan with unlimited minutes is a waste of money compared to a limited-voice plan. The Wall Street Journal recently reported that the average number of minutes used for contract cell phones users in the U.S. has been dropping steadily since 2007 (826 minutes per month), hitting the 681-minute mark in 2011. For many, trimming their monthly bill was as simple as switching from an unlimited to limited voice plan. Often, subscribers didn’t even need to change their behavior to realize savings.

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Just as consumers have gotten used to the concept of saving via more limited voice and texting plans, though, the options are changing one more time. This week, Verizon introduced a much-publicized “Share Everything” plan, which only comes with unlimited voice and texting, as well as data plans that can be shared among family members and multiple devices—and that in some cases are double the price of data plans of old. The new plans, which are optional for existing Verizon customers, are available as of June 28.

Why would Verizon make the switch to strictly unlimited voice and texting? By getting rid of limited options, Verizon is getting rid of the possibility that customers would be paying less each month. As mentioned, people are using cell phones less and less for calling. Also, what with Skype, Google Voice, and other free or cheap services, it’s fairly easy to call and text without using up one’s monthly allotment of minutes or messages. Data usage, on the other hand, is increasing, and Verizon’s new strategy of jacking up prices on data reflects the rise in demand.

As a Forbes post put it, Verizon’s new plan makes it possible for heavy users—especially, families filled with heavy users—to save money, it is also “a slap in the face for consumers who count their minutes and texts and try to keep their monthly bill as low as possible.”

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The Washington Post did some of the math on Verizon’s offerings:

Under the new plan, a family of four could easily spend $200 a month for three smartphones and a tablet with a shared data limit of 6 gigabytes. One user with a 2-gigabyte plan for $60 would blow through the limit by streaming 30 minutes of video and five minutes of music and visiting five Web sites each day for a month.

If, as my colleague at Techland noted, “you already have unlimited voice and text–or, in some cases, more than the minimum–Share Everything is cheaper for a comparable amount of data.” But fewer and fewer people have felt the need to have unlimited voice and text plans, and therefore fewer and fewer people will actually realize savings through the new plan.

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Switching to a no-contract plan has been one of the easiest ways to truly save on monthly wireless bills. The problem is that such plans haven’t been available for the most popular phones, Apple‘s iPhone in particular. That’s changing soon.

Starting on June 29—one day after Verizon’s new plans become available—Virgin Mobile will begin selling no-contract iPhones with service starting at $30 per month. The catch, if you want to call it that, is that these iPhones are not subsidized by the provider. Instead of paying, say, $99 for an iPhone from AT&T that locks you into a two-year contract, Virgin Mobile customers must pay full price (from $549) for their iPhone.

Cricket Wireless, another provider that doesn’t lock customers into any plan for the long haul, will also begin selling iPhones as of June 22, with prices starting at $400 and $55-per-month plans. In the case of both Cricket and Virgin Mobile, when considering the total costs of ownership for two years it pays for consumers to pay more upfront for the iPhone, as CNN Money’s math attests:

Virgin’s charges will total $1,370, compared to $1,720 on Cricket and an average of $2,775 on the other carriers.

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The downside for providers such as Cricket and Virgin Mobile is that, in certain parts of the country, their coverage and service is weak compared to AT&T and Verizon. But the savings that these providers offer is substantial. For $55 per month, Cricket offers unlimited voice and texts and data that may be slowed after a customer hits the 2.3GB mark in a month. Virgin Mobile’s $30 monthly charge (factoring in a $5 savings with automatic payments) comes with similar data allowances, as well as unlimited texting and 300 voice minutes. Considering how little smartphone owners have been using their phone’s traditional phone feature (calling) lately, that may very well be enough.

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

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