Roger Dluzak used his survival skills to fight his way through the jungles of Vietnam in the 1960s, and picked up a few medals before coming home. He says he uses those same skills now to navigate the jungle of being a U.S. consumer.
"I learned how to survive a long time ago, still using the survival skills in today’s economy," he said. So when he saw his cellphone bill creep up toward $100 per month, he took immediate evasive action.
"When my contract was over with AT&T, I went to Walmart and bought their best smartphone, a Samsung Galaxy II for $350, and signed up with Straight Talk ... for $44 a month, or $500 a year," he said.
Dluzak is part of a small but growing segment of smartphone users who are fighting back against triple-digit bills by exploring creative options.
The Red Tape Chronicles recently wrote about a cellphone industry report claiming the average bill was $47 per month, and asked readers to tell us how much they pay for service. From the 1,400 responses we examined, the average bill was more like $125 per month, and about one-quarter of respondents paid more than $200. We looked at the stories behind these high-bill payers in another recent story, "Newest family budget-buster: the $300 cellphone bill."
But hundreds of others wrote in to brag that their bills were at or below that industry average $47. Roughly one-quarter -- 423 out of 1,400 -- said their bills were under $85, and 223 said their bills were $50 or less. Today we look at how these cheap talkers do it.
The easiest way is to use your phone as just a phone. There is no shortage of old-fashioned, flip-phone plans that can keep your bill south of $50, provided you don't end up receiving a bunch of unexpected text messages. If you want a phone-only phone, you might want to look away from the major carriers, however, which are now focused on lucrative data-hogging customers. If you wander into a local Verizon store, for example, you are likely to find only one or two basic phone options. Smaller carriers and pre-paid services are the right choice here. Those who want cellphones only for emergencies and pay for only the minutes they use can keep their bills down to $20 or even $10 per month. Ditto for those who just don't want to have their face buried in a smartphone for hours per day.
"Friends have smartphones. I couldn't care less,” said Judith D. Schlesinger, 67, who lives just outside Annapolis, Md. “If they want to talk to me, they can call. If not, they can send email. I had text and email turned off on my phone after I received charges ... for some junk texts and some unknown use, they said, of 1 megabyte of data. I'd never used either before and don't miss them."
But can cellphone users who worry about getting lost, getting an important work email on the road or being able to look up movie times while sitting at dinner keep their costs down to $50 monthly?
You'll need a bit of geographical luck, you generally won't enjoy the latest new phone, you might need to forgo any kind of customer service and you probably need to swallow some high up-front costs. But plenty of Red Tape readers are living proof that low smartphone bills exist and, like Dluzak, most of them are darn proud of it.
"My service has been great for the past five months or so and I only pay $45 a month!!!" wrote Edwin Argueta. He lives near Los Angeles, and uses a Galaxy Nexus phone he purchased directly from Google on Straight Talk's service, which offers unlimited text, talk and web surfing.
David Wynn lives in Little Rock, Ark., and had similar enthusiasm for Straight Talk.
"I had recently completed a two-year contract with AT&T; enjoyed the service but not the telephone ... or the price. I was paying $100 for unlimited talk and text," he said. "Now I have a better plan (unlimited talk/text/data) with Straight Talk and my cost is a flat $45 per month plus tax. … The bottom line is. I am extremely satisfied with Straight Talk and plan to keep it forever."
His enthusiasm hasn't persuaded his wife, however, who has an iPhone on AT&T's network and is on a “'quest to have the most expensive plan ever," Wynn said. Her bill is $150 monthly, he said. "I've yet to convince her that she's going in the wrong direction."
Straight Talk, offered through Walmart, was very popular with budget-conscious Red Tape readers. Of the 433 who pay $85 or less monthly, 36 use Straight Talk, and nearly all of them pay less than $50. Another 28 use Virgin Mobile, which offers similar (but slightly more expensive) discounted plans. Virgin has one advantage -- users can "tether" their phones, and use them as WiFi hotspots for tablets and laptops, by paying an extra $15 monthly. Straight Talk doesn’t allow tethering. Boost, Tracfone, MetroPCS and Consumer Cellular were also popular with Red Tape readers, and there were a few Cricket users.
Some in this discount group were truly lucky – they’d managed to hold on to inexpensive, “grandfathered” data plans from major providers. Since that option isn’t available any longer, we won’t spend time on that.
But customers with moderate data requirements also can find deals, said Sam Simon, senior fellow at the New Millennium Research Council, which advocates for phone consumers. “We tend to think about data gobblers, but if you aren't the kind of person who’s going to use a lot of data, there are cheaper options,” he said.
There are a few big hurdles to getting a deeply discounted data plan.
As with all things cellular, the network you use can make or break your deal. A cheap smartphone that can't access your email is useless. A discount seller’s service might not work where you live. Because they ride along the large carriers' networks, some have huge coverage gaps. Straight Talk users, for example, must use either AT&T or T-Mobile’s network, while Virgin customers use Sprint’s network. While service might be good across town, it might be terrible at your house or along your commuting path. When shopping for cheap smartphone service, do a lot of research and ask your friends and neighbors about their experiences with dropped calls and data speeds.
*Where's the store?
While there are plenty of loyal Straight Talk, Virgin, and Boost customers, there are plenty of complaints about customer service, too. Verizon has the largest national network of cell coverage, and Verizon retail locations are as common as fast food joints. That's handy when you have a cellphone emergency. Discount data users complain frequently that customer service isn't a kiosk away -- it's continents away, as troubles are handled by overseas call centers.
* Bad to big users
Data plans are complex, and change frequently, so it’s difficult to give generic advice, but this is certain: Cheap unlimited plans are not designed for data hogs. Straight Talk has a soft cap at 2 gigabytes per month or 100 megabytes per day; that might not get you through an entire Netflix movie or baseball game. Users who exceed these marks get warnings that they can be terminated at any time, which would really stink if you paid a lot of money for a phone because you planned on sticking with a discounted service.
Speak of the devil: The biggest hurdle for many would-be discount plan users is the "bring your own phone" element, which can require a large up-front investment. The discount plans offer no phone purchase subsidy with two-year contracts. For example, Walmart is offering a Galaxy SII Android phone for $349, while similar phones would be free from major carriers to users who sign a contract. Of course, there's no such thing as a free phone, and those subsidized phones end up being more costly than one used with a "bring your own" plan.
Dluzak's situation is typical:
"With AT&T, the cost for two years would have been $2,400 even if I didn’t go over my data limit," he said. "With Straight Talk, two years is $1,000, plus the $350 for the phone ... so which would you rather pay?”
Here's a rare case where it's sensible to make a purchase with a credit card, even if you can’t pay off the full balance at the end of the month. Instead of having the carrier subsidize the large purchase, borrow the money from your card-issuing bank instead. The interest you pay will be less than the "interest" you'd pay the carrier for the subsidy.
*Not the latest gadget
Cellphone-plan discounters and prepaid services generally don't offer the latest gadgets. Walmart isn't selling the Galaxy III to prepaid users, for example. This isn't so much a conspiracy as it is market economics, says Simon.
"The latest phones would be too expensive for the prepaid folks to provide," he said. They are also servicing their budget-conscious customers, who are clearly more worried about price than getting the latest and greatest gadget. "You still get a decent phone, just not the latest one,” he said. “It might be one generation older."
But even this bit of accepted market behavior is beginning to change. Starting this week, Apple began selling fully unlocked iPhone 5 devices direct to consumers for $649 to $849, depending on model. The device has some limitations -- you can only buy the GSM model from Apple, meaning it can't be used on many U.S. networks. But the sale shows that smartphone contract haters are starting to enjoy more options.
The emergence of a thriving prepaid market for flip-phones over the last decade was a godsend to consumers tired of overpaying for calling minutes they never needed, just to avoid accidental overages and surprise big bills. As pre-paid plans emerged from the shadows and became mainstream, the competition forced contract carriers to lower prices and offer more consumer-friendly options. This same cycle is playing out now with smartphones. Contract phones and the big providers still have an edge with smartphone service and gadgets. But that gap is closing. If you aren’t a technophile, don’t plan on streaming a lot of video with your phone and don’t need tethering capabilities for home or work, you owe it to your family budget spreadsheet to investigate month-to-month smartphone plans.
“Sure, it’s not the latest and greatest,” Dluzak said. “But the latest and greatest will cost dearly. Dearly is twice the price, and yes to be safe, you’ll need to make sure you’re sitting in a nice comfy chair when you open the bill, because if you’re not, you could fall over and injure yourself.”
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