July 20, 2012 by David K. Sutton
iPhone, Android contract costs on Verizon, AT&T, Sprint, T-Mobile…and the people who choose to pay
I need to rant just bit on the obscene costs to own and operate a smartphone and before I start I’d like to say I’m not endorsing any specific company or product. This is simply one consumer who happens to think the cost of smartphones is ridiculous, whether it be an iPhone, Android or Windows Phone (should I even mention Blackberry?). If you want the latest and greatest smartphone typically you must pay at least $100 upfront, but sometimes $200 or higher for the phone and then lock yourself into a 2-year contract that will wind up costing you near $2000. Who does this? Apparently a lot of people. So far I refuse to take part in this ripoff. Yes, smartphones are great devices. They allow us to keep up with friends, find out the latest news, and search for anything – anywhere, but how is it that collectively as a society we’ve accepted the ever-increasing cost? Do most people believe that spending $70-$80-$90 (on the low side) a month for a smartphone is a good deal?
I have to assume most people are as frustrated as I am with the high cost to own a smartphone but I guess most people have given in to temptation anyway. I certainly gave into the temptation of owning a smartphone, but so far I have not given in to paying the high cost for a smartphone contract. Technically speaking my first smartphone was a work-issued Blackberry and that goes back about six years now, and of course it was free from my perspective. Last year I decided to supplement (essentially replace) by work Blackberry with my own personal Android phone. I chose Virgin Mobile’s prepaid $35 smartphone plan, which is less than half most contract plans, and I went with their top-line offering, the Motorola Triumph. But even that $35 is more than I’d like to pay for a smartphone plan with modest data usage.
I’ll admit that the price I’d like to pay isn’t based on market economics, but I think a fair price to pay for a basic smartphone plan that gives you at least a few hundred MBs of data each month and a couple of hundred minutes talk time should be in the $20-$25 range, $30 tops. If you want more data, then sure, it can cost a bit more. But even for the high data plans, spending near $100 (or more than $100) a month is simply outrageous. But you know what? Companies like Verizon, AT&T, Sprint and T-Mobile will continue to charge these amounts if people keep buying the product. Thankfully the prepaid smartphone market is growing with more services to choose from and more smartphone options including the iPhone, which is now available on Virgin Mobile and I think Cricket, although you do pay a hefty upfront cost for the phone ($650, but keep in mind you will still pay $200 upfront on a contract plan). If you do the math it’s still a much better deal to go with prepaid over contract. Even with the high upfront cost of the iPhone on a prepaid plan the break-even occurs around the 1-year mark.
As for my smartphone situation, after about 7 months (and just about break-even compared to contract costs) with my Android phone on Virgin Mobile my work-issued Blackberry was replaced with a shiny new iPhone 4 on Verizon. So I cancelled my Virgin Mobile account and now I’m back to spending zero a month for mobile connectivity. This highlights the convenience of using a prepaid service in that I didn’t have to worry about breaking out of a contract and paying a large sum of money to do so. After only 7 months of use, I was able to easily walk away from my prepaid plan.
As for the work-issued iPhone? It’s a good gig if you can get it.