Talk is cheap, all right. Yet most of us are still paying too much for cell-phone service. Way too much. We'll show you how to get the right wireless plan at the right price.
They are easily the hottest consumer products in America, and they're only going to get hotter. More than 86 million of us have wireless phones that's 17 million more than subscribe to cable TV with a new user signing up for wireless service every two and a quarter seconds.
The main reason everybody's climbing on the wireless bandwagon: It's getting so cheap. Over the past three years, the average cost per minute of wireless service has dropped by almost 50 percent. Big talkers are benefiting the most. Just two years ago, Bell Atlantic Mobile's gabbiest plan cost $320 per month and came with 800 minutes of airtime. Today that same package is only $150 and includes 2,000 minutes of talk per month. As a handful of wireless companies jockey for national leadership Bell Atlantic Mobile is teaming up with GTE (GTE) and Vodafone AirTouch (VOD), just to name the largest of several mergers the pickings should get even better, says Paul Segretto, a wireless industry analyst at the Washington, D.C.-based Strategis Group.
And yet...are you getting the best possible deal on your wireless phone? We'll venture that you're not by a long shot. The Strategis Group figures that the average American who uses a wireless phone to call friends and family pays $60 a month to his carrier. For this he gets a little over 200 minutes of talk time. But if you look at plans offering roughly 200 minutes a month in the top U.S. markets, you'll see the average monthly fee is about $37 or $23 less than that $60 a month. Sure, you'd have to add taxes and roaming and long-distance charges to that monthly fee, but chances are you'd still be paying too much. The fact is, most people could easily slice their wireless bills by 30 to 50 percent without spending any less time on the phone, says Bob Egan, an analyst with the technology consulting firm Gartner Group.
The problem, for most of us, is that we're simply choosing the wrong plans. Which is easy to understand, when you consider the number of wireless service choices available today. Just a year ago, the Web site Point.com tracked 3,500 different plans in its nationwide database of wireless deals. Today there are more than 5,000. When Andrea Fine first signed up for wireless service in January, she had no idea where to begin. "It was so overwhelming," says Fine, an editor at NutriSystem.com (NSCI). "So I just went to a name I knew." That's AT&T (T), of course, her residential phone and Internet service provider, which told her she'd be covered in the Philadelphia suburbs where she works and lives. But after she left the store, she found out calls made from her office or her living room would be considered "roaming," costing her 60 to 69 cents per minute. "There's just too much to choose from digital and analog, local and long-distance," says Fine, who's since switched to Bell Atlantic Mobile. "The learning curve is so steep."
Never fear. We'll help you make sense of all these choices and, in turn, slash your monthly phone bill. The first step: Think about why you want a wireless phone and how you'll use it. Do you power up your phone only in an emergency, or are you one of those people who can't stand being out of touch, even if it means taking calls in restaurants and on crowded commuter trains? (Incidentally, if you belong to the latter group, the rest of us wish you would please knock it off.) Do you make most calls during the day or at night? Whom are you calling, mainly? As you'll see in the following six user profiles, answering those kinds of simple questions will make a huge difference in how much you pay every month.
Though wireless companies are famous for tying you into restrictive contracts and then nailing you with cancellation fees when you try to get out, keep in mind as you read these profiles that you do have some leverage to negotiate with. (For one thing, it costs a wireless carrier $375 to set up each new customer, so it has a rather big incentive to keep you happy, says Adam Zawel, an analyst with the Yankee Group.) Bill Andrus, a Denver radio producer, found out last summer how flexible Sprint can be. He knew his wife, a teacher, wouldn't need her phone last summer, but didn't want to lose the special 200-minutes-for-$30 promotional plan they'd gotten for her from the carrier. No problem, said Sprint's customer-service rep. Sprint credited her a month's fees and guaranteed her the same promotion when she started back on the plan.
The Safety Caller
You just want a phone you can toss in your handbag or into the glove box to cover you in an emergency. Until recently, your best option was a bare-bones analog plan for which you'd pay a low monthly fee ($10 to $20) and high per-minute charges. (Analog systems are the first-generation, early 1990s cell phones, which you can use nearly everywhere in the U.S., but which usually lack newer features such as call waiting or data services.)
These days you have a couple of better alternatives. The simplest route for someone who uses the phone less than 10 minutes a month: Choose one of the new prepaid phone plans offered by companies such as AT&T. You'll have to buy a phone (the Nokia (NOK) 5160 for $150 is a good option with AT&T's service), and then you'll need to shell out for a set amount of airtime up front, buying it at the carrier's shops, convenience stores or by calling customer service directly.
On a cost-per-minute basis, these plans aren't cheap. Sixty minutes of local calling on AirTouch's prepaid plan will cost you $30, or 50 cents a minute. But the point is, you're not going to be making a lot of calls (ahem...right?). For the true emergency-only user, that 60 minutes of talk ought to last for months.
Three things to watch out for: One, be sure to pick a service that will let you carry over your unused minutes from month to month (AT&T and AirTouch both give you six months before your minutes expire). Second, we suggest you stay away from Sprint's prepaid plan; it charges an activation fee of $125 most others are free or less than $35 and nails you for an additional 50 cents a day whether you use the phone or not. Finally, prepaid plans from some companies including Sprint and GTE don't allow roaming. That kind of defeats the purpose of having a phone for emergencies, because roaming boundaries, after all, aren't exactly marked on the highways.
If you can't promise yourself that you will use the phone only for emergencies, prepaid plans are probably not your best choice. Chances are, most urban and suburban dwellers will be much happier with a low-end digital plan, such as Powertel's Personal Power 20, offered in Atlanta, which gives you 100 minutes for $20. You'll also get the first minute of each incoming call free. (Contrast that with BellSouth Mobility's LiteTalk 30 analog plan in Atlanta. For the same monthly fee, you'll get only 30 off-peak minutes a month and pay 40 cents a minute for any call you make during the day.) Extra bonus: Batteries in digital phones last almost three times as long in standby mode.
The Wireless Family
Donna Silva was tired of having to page her husband and 14-year-old son and wait for them to return her call whenever there was a family crisis. So the Atlanta mom went to Office Depot and bought four Nextel (NXTL) radiophones for her husband, son, mother and herself. But when the first bill came, she was bitterly disappointed: Calls between family members weren't unlimited, as promised. Instead, Nextel's monthly service was going to cost her as much as $100 per person. (Office Depot's spokeswoman says the terms of Silva's plan should have been written at the bottom of her contract, but Silva insists they weren't.)
A much better solution, she knows now, is AT&T's Family Plan, which lets each family member make unlimited local calls to other family members and 60 minutes of calls to others for $25 a month each. The clincher? Since the Silva family has AT&T service on its home phone, all four can also call home for free and talk as long as they like.
The past few months have seen a handful of competing family plans come onto the market, but be aware that they're not all created equal. AirTouch's Family Connection, for example, does not allow you to make free mobile-to-mobile calls they count as if they were regular (chargeable) minutes. Other carriers such as Bell Atlantic Mobile have plans that give users a bundle of minutes to call each other on mobile phones, but, unlike with AT&T's deal, the minutes are not unlimited. One more plus for AT&T's plan: It's the only one to include your home phone within the free "calling circle."
The Socialite
You sit at your desk all day, glued to your office phone and computer. So for the most part, you don't need a wireless phone during daytime hours. But on nights and weekends, your portable might as well be another accessory. You order movie tickets over the phone. You call to get directions to the dinner party. You call friends and family locally just to chat about your weekend.
You need a basic digital plan, plus a nights-and-weekends package. Great deals on nights and weekends are often included in promotional programs these days, but you may have to seek them out. David Trabue, a former musician who's now in law school in San Francisco, discovered Sprint's largely unadvertised All-Nighter Plan when researching his options on the Web. It gave him 70 peak minutes and 500 night-and-weekend minutes for just $25. "It was originally a plan for college students, but it fit my calling needs," says Trabue. He used the off-peak minutes to talk to his girlfriend in San Jose and his son in Humboldt County, Calif., either of which would have cost him eight cents a minute from his home phone. "It cut at least $20 off my monthly phone bills," he says.
The All-Nighter Plan is no longer available, but other examples abound. Los Angeles-area residents might want to look at Pacific Bell's "oYo" plan, which gives you 90 anytime minutes and 1,000 night-and-weekend minutes for just $20. The GTE HomeChoice 25 plan is a standard one that gives 25 minutes for $20 to Seattle callers; spend an extra $10 and you'll get 1,000 free night-and-weekend minutes.
The Local Commuter
You've got a long local commute, but you always want to be in touch. You check voice mail, return business calls and keep in contact with the office when you're out meeting with clients, but you also use the phone to call from the grocery store or the soccer field. What you need: a bulk-rate digital plan all the carriers offer them these days with at least 300 minutes of talk a month; you could need as many as 800. (Unless you use the phone an hour or more a day during peak hours, though, don't bother with the 1,000-minute-plus packages. "Bulk-rate plans are like a wolf in sheep's clothing," observes Egan of the Gartner Group. "The longer you own your phone, the more you tend to use it.")
You make 500 minutes of local calls or more per month? Then you shouldn't even think of paying more than a dime a minute. Smaller carriers like Omnipoint, VoiceStream (VSTR) and Powertel (PTEL) have great standard values for people who make lots of local calls. In many western states, for example, VoiceStream will give you 500 minutes for $40. For $70, the Omnipoint OmniRate Home Plan gives you 800 minutes per month in Philadelphia and the New England region making each call cost less than nine cents a minute.
Since you'll often be using your phone for business, you'll want decent call quality. There's much debate among analysts about which technologies offer the greatest sound; in truth, the average listener won't really notice a difference in the general sound quality of competing phones. You will notice if you're dropped from service in the middle of an important business call, however. AT&T, for example, was flooded with complaints about dropped calls and unavailable service in New York in late 1998, when it oversubscribed its digital networks. Your best defense is to take advantage of an offer carriers don't always advertise: When you sign up with a new plan, you can often try the phone out for 30 days before signing the standard one-year contract, to see if the coverage quality is good in your area.
The Frequent Traveler
Sprint PCS's Free and Clear plan sounds like the frequent traveler's dream: 600 minutes of calls per month for $70 and free long-distance. That is a good deal, providing you stay on its network, which covers most major U.S. cities. But if you go off the Sprint network a lot, you may regret it. Just 100 minutes of off-network roaming calls will cost you an extra $69 with Sprint. A better deal could be one of the flat-rate plans such as AT&T's Digital One Rate. Your monthly fee would be $20 higher than with Sprint PCS's $70 Free and Clear plan, but you wouldn't have those roaming charges.
Whichever type of plan you choose, you should buy a dual-mode phone that can switch between analog and digital networks. The latter are growing fast, but they still cover only 70 to 75 percent of the U.S. population. Analog service is essentially everywhere. The $200 Nokia 6160, one of the world's most popular phones, will give AT&T users abundant talk and standby time, and the popular $200 Motorola StarTAC 7760 is a good option for such services as Bell Atlantic Mobile and AirTouch.
The Gadget Guru
You need the latest and greatest of everything? Well, then you're going to need the Web on your phone. Just don't expect it to be much like the Web on your computer. "It's a cute little toy," says Kent Ritchie, a systems engineer in Minneapolis who has a Sanyo SCP-4000 Web-enabled phone with Sprint's Wireless Web service. "But the time I spent punching in data on my keypad cost me a lot of money: It took me 13 minutes just to retrieve two emails from Yahoo! (YHOO)."
At the moment, five carriers are offering Web access, but over the next six months, this segment of the wireless world is set to explode. Our suggestion? Wait. AT&T recently introduced unlimited wireless Web service to its business users for $15 a month and expects to offer a similar pricing plan for consumers by midyear. Plus, only a limited number of Internet sites are available for the wireless Web right now. Within months, there will be many more.
If you simply must sign on now, you've got a couple of options. Residents of Washington, Oregon, Ohio and Michigan should take a look at AirTouch's new Mobile Web service, which doesn't charge a separate monthly fee and offers access to special wireless versions of sites such as Hotmail, Expedia and Amazon. A broader although more expensive service is Sprint's Wireless Web, which has more content partners and more consistent service across the country than any other carrier. "In terms of wireless Web access from a national standpoint, it really is Sprint heads and tails above the rest," Egan says. If you already have a Sprint digital plan, and the monthly fee is at least $30, another $10 a month will get you access to Sprint's Wireless Web. You gain no additional time but can use the plan's bundle of minutes for either browsing or talking.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox