Wednesday, February 25, 2015

Kill The Wireless Phone Contract - Do Yourself A Favor

Kill the Wireless Contract! Buy Your Own Phone

I am an idiot. I signed a two-year contract to get my iPhone 6.

Without much thought, I did what most Americans do every two years: I agreed to be locked in by a multibillion-dollar wireless company. With pricey contracts and confusing add-ons, they make it incredibly hard to leave, let alone take our phones with us. I deserve to walk around with “Property of Verizon” stamped on my forehead.

We sign on the dotted line because we presume it will save us money on that new shiny phone and our monthly service. But here’s the thing they don’t want us to know: Neither is necessarily true anymore.

It’s now surprisingly easy to live a fruitful mobile life, free of carrier contracts, thanks to unlocked phones. With one, you aren’t bound to a carrier. You could switch from, say, AT&T to T-Mobile or Cricket Wireless, or even to Vodafone when you take that vacation to the Greek Isles. It’s actually how most of the world buys mobile phones.

The bad news: To get that freedom, it means paying more upfront. (That $199 iPhone? It really costs $650!) But many great phones are becoming more affordable. And the benefits far outweigh that initial sticker shock. You’ll have your pick of carriers, you’ll be able to leave whenever you like and you can save some real money in the long run.

There is a lot to hate about the wireless business, but right now the surge in competition is something to love. Companies like T-Mobile and struggling Sprint, along with smaller prepaid carriers, have aggressively cut service costs to rival the two giants, Verizon and AT&T. So if your contract is up (or getting close), it’s time to consider making a break for it.

Getting an Unlocked Phone

Buying an unlocked phone requires us to change our mind-set and embrace paying the full cost of the phone upfront. The key is to keep reminding yourself that subsidized pricing—paying a little upfront, then paying off the rest as part of the monthly bill—is how carriers get you to sign over your soul. (Even worse: Under these plans, if you don’t upgrade every two years, you end up just continuing to make payments on a phone you already own!)

Lower prices on the best unlocked Android phones can make the transition easier. In the U.S., Motorola has been leading the way. Its 64GB Moto X, one of my favorite phones, is $500 unlocked. That’s $250 less than an unlocked 64GB iPhone 6. For people who don’t care about the latest and greatest, the 8GB Moto G, with an inferior screen and camera, costs only $180 unlocked.

The $300 range is becoming an early-adopter sweet spot. While Google’s $350 Nexus 5 doesn’t have the best camera, it gets all the latest Android updates. Better still, the exceptional OnePlus One costs $300 but has the specs of a $600 phone. One quirk: You can only buy it on Tuesdays. (Xiaomi’s Mi Note is a great $375 option, though it’s not yet sold or supported in the U.S.)

Though Google, Motorola, OnePlus and others sell phones directly from their websites, you can also find deals on lower priced unlocked phones at Amazon, Best Buy and other major retailers. Just remember, the more you save, the more you’re likely to compromise.

Sadly, Apple doesn’t offer that sort of affordable pricing on iPhones, though you can save about $100 if you look for used models on, and other reseller sites. Looking at pre-owned devices is a wonderful idea. Many good-condition phones end up back on the market after only a few months of use.

It’s also easier, at least in theory, to unlock out-of-contract iPhones and other smartphones at your carrier. Just this month, at the urging of the FCC, carriers began to disclose their unlock policies and speed up unlocking requests for out-of-contract phones. (With the exception of Verizon, all the big U.S. carriers lock under-contract phones to their networks.)

This week, AT&T almost instantly approved the unlocking of my out-of-contract iPhone 5. But AT&T declined requests to unlock an iPhone 5S and iPhone 6 still in contract.

Getting the Service

The next step is to find a service plan for your new out-of-contract phone.

The best way to save is to stay away from AT&T and Verizon. Both giants knock $15 to $25 off your monthly bill if you have an out-of-contract phone. While that sounds good, people who pay up front for their phones don’t really pay any less over two years than they would under contract with a subsidized phone.

Verizon explained that it has begun to embrace pay-over-time “early upgrade” plans in place of subsidized-phone contracts. (These won’t save you any additional money either; they just spread the cost out.) AT&T offers similar plans, but declined requests to explain its contract strategy.

The real savings can come from going to one of the second-tier, prepaid carriers, which piggyback on the big U.S. networks but charge far less. Cricket Wireless, for instance, is on AT&T’s network; MetroPCS is on T-Mobile’s. StraightTalk gives you a choice.

Before you start considering them, know that unlocked phones are more often compatible with AT&T and T-Mobile’s networks, because they run on the GSM network. Fewer phones are compatible with Verizon and Sprint’s CDMA networks. (Some iPhone models are odd ducks—they can run on both networks. Even then, they often need to be unlocked to switch carriers.)

With all of them, you’ll see the savings immediately. Take StraightTalk, which charges $45 a month for 3GB of LTE data and unlimited talk and text—on AT&T’s network. AT&T charges $65 for the same basic plan.

I used a Cricket SIM card in the OnePlus for a week in New York and was completely satisfied with the service. Same with a StraightTalk SIM card, using AT&T’s network, in the Moto X. You’ll get the same coverage you would with an AT&T SIM card.

But if I could travel back in time, I’d pick T-Mobile as my getaway carrier. The company ditched contracts and offers cheaper rates off the bat, with no extra phone-subsidy padding.

For $60 a month, you get 3GB of LTE, unlimited talk and texting and other perks like unlimited music streaming, international service and an extra 10GB of LTE data to use throughout the year. Similar to AT&T and Verizon, you can buy a phone on time, paying off the full price over one year or two (with no penalty for early payoff). Choose this option carefully, however. It is, after all, the newest way carriers keep you from straying.

There is something comforting about sticking with an established player like T-Mobile. I’m still a sucker for reliable customer support via phone or in a retail store. (T-Mobile topped J.D. Power’s 2014 customer-care survey.)

Since I spend most of my time in major metro areas, T-Mobile is a fine choice. But a switch means giving up the broader, more reliable coverage of Verizon and AT&T. Before you choose, check how the carrier’s service fares in your area by using a site like

If you do switch to one of the smaller guys and you don’t like it—guess what! You can just get up and leave. That’s the real freedom. They’ll never dangle a contract under your nose. You can set up an auto-renewing monthly plan and cancel any time. (Just be forewarned: Porting your number to another carrier may cause some stress.) After years of being shackled to my carrier, I feel empowered even thinking about it.

That doesn’t mean carrier contracts will vanish overnight. For many families and people with corporate discounts, they might still make sense. But for the first time in a long while, the industry momentum is on our side, and it’s our fault if we don’t take advantage of it.

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