[Update: added expiration reason]
The NY Times ran an article by Brian Chen “Prepaid Cellphones Are Cheaper. Why Aren’t They Popular?” Brian points out that less than 25% of mobile/cell phones in the US are pre-paid and pre-paid work out to be the best choice from a cost perspective and wondering why more people by don’t use them.
Based on my experience, I currently have a t-mobile USA Contract phone; 2x UK pre-pay SIM cards, a t-mobile USA pre-pay SIM and a Virgin Mobile India pre-pay, here is what I can say about pre-pay in the USA
- Pre-pay in the USA is way, way more expensive than anywhere else in the world. For an example, to get a unlimted 4G plan from t-mobile, I pay $70 per month. Here in the UK, with the O2 network I can get effectively the same for UKP 10 per month, plus a UKP 10 per month “The Web Works” bolt-on(total at $1.5632 per UKP, $31.27); In India, its about a 3rd the cost of the UK, effectively $10 per month(the data was much slower though).
- Friend and retired IBM Fellow Mike Cowlishaw pointed out one major reason why US pre-pay are a poor deal compared to at least UK, you pre-pay for a US phone and you typically pay a set amount, that amount expires after a set period. For example, for my current US t-mobile pre-pay, I paid $70 and that will be gone by Aug 13th. Compare that to my UK O2 pre-pay. I paid 10 UKP, then added additional credit as needed. Provided I keep at least 10 UKP it never expires and I don’t get charged for incoming calls.
- Phones are locked so that you can’t put any SIM from another network, but you can get this removed depending on the network. In my case t-mobile refused point blank to remove mine when requested as I’d not had my pre-paid account for 60-days. Despite the fact that when I bought it, and told them I’d need to put a UK SIM in the phone, they said t-mobile UK could handle it. They couldn’t, nor would t-mobile USA. It’s not my first time at the rodeo, I got an unlock code from an Internet supplier.
- Phones, especially smart phones are deliberately incompatibe between networks. See the picture. My t-mobile USA an Samsung Galaxy S3 (SGH-T999) with an O2 SIM, compared to my friends O2 Samsung Galaxy S3. Right next to each other, his gets an HSDPA(4g) connection, mine doesn’t. This is common and works both ways, buy a unlocked phone in Europe, take it to America, no go. While the networks claim compatibility, the drivers for the radio’s inside the phones are always optimized/proprietary and you never get the best network speed. Again, you can, and I have, get the network radio drivers from the Internet and install them. This is not a job for the faint hearted.
- Bandwidth limits for data are mostly imposed, on pre-pay you get the contract when you buy more network, not once when you take out the contract.
- The is little or nor clarity about contracts and tie-ins with wifi access for pre-pay customers; most contracts include some form of wifi access, however increasingly US networks are enjoing GSM and wifi network data limits, which is really just nonsense and a deliberate fraud of mobile customers.
All the US Networks are the same, this is to some degree a cartel. They all have the same things to lose, and given the incompatible networks, nothing to gain by having a free market. Compare that to Europe where the EC has mandated compatibility, and roaming charges. If you are considering a pre-pay phone, don’t expect to buy a cheap phone off the Internet, unless its a new phone for the network you are going to use.
At some point, Apple, and/or Samsung/Google are going to break the network hold, it’s not clear though that it will be better the devil you know.