Why are cell phone plans overpriced?

My wife and I love our iPhones. But the costs! Oh, the costs. We're paying Verizon Wireless nearly $200/mo for two phones. I make maybe one phone call a week. And most of the time wifi is available and I could be using Skype instead. I got rid of unlimited text messaging, bringing the cost down by, oh, maybe $20/mo or so, but it's just not enough, and I just can't find a cheaper plan for us on Verizon Wireless. So, I've started to look around. Our contract is not up for a while, but that's not going to stop me from at least looking.

Before we get started, here are three important things to keep in mind when considering these, or any other, cell phone provider and service plan.

• Avoid WiMAX-based 4G. Sprint's current 4G technology is WiMAX-based (as opposed to LTE-based) andClear is the provider behind the scenes, coverage is poor and the network has seemingly always had issues. We've tried to use Clear WiMAX ourselves both with home service and mobile service. It's just not ready for prime time, and I'm not sure it ever will be. Right now, true LTE 4G is available only on Verizon and AT&T, and the iPhone 4/4S supports neither WiMAX nor LTE as of June, 2012. The take-away here is: Plan your life around 3G service for now.
• Most of these services actually utilize Sprint's voice and data (3G) network -- which has been demonstrated to be slower than Verizon or AT&T's 3G network. That's not going to be a problem for most users -- you're not going to be downloading movies over 3G. For typical usage consisting of light to moderate web browsing, email and social networking, you'll be fine. Turn on wi-fi as needed before downloading anything big and beefy.
• Don't believe the "unlimited data" hype. All of these providers will throttle or cap you at some point. For example, Virgin Mobile says that they will throttle you if you utilize more than 2.5 gigabytes of data in a month. Unless you're streaming Netflix over 3G, you're not likely to be impacted by this. The one thing I'll miss is using Skype over 3G, but that's a small price to pay for...a much smaller price to pay ongoing. Also, most throttle instead of suspend service. Throttling is much friendlier than capping, in that you still have access to the internet, just at a slower speed. Providers who cap you will typically cut you off right there and then when you hit the limit, requiring that you pay an extra fee for additional megabytes.
• Jump on the Google Voice bandwagon! I ported my old cell phone number to Google Voice for a one time fee of $20. Now my legacy phone number rings through to me at whatever phone I specify. I ignored whatever phone number Verizon provided to me, and I won't have to bother with number portability in the near future. If I switch providers, it'll take me about ten seconds to go into Google Voice and modify settings so that calls reach me on the new provider instead of the old provider. This process is transparent to callers -- they have no idea that you've changed anything. Also, Google's handling of voice mail is fantastic -- I highly recommend it. It can SMS you transcripts of messages. It will email you transcripts as well, and it's very easy to play back messages by clicking on the link in email or in the Google Voice app on iOS or Android. Consider this: I've never even bothered to configure my Verizon Wireless voice mailbox.

Now that I've gotten that out of the way, allow me to share with you the top five cheapest smartphone plans/service options out there as of June, 2012, as identified through my research.

Option #1: Voyager Mobile - http://www.voyagermobile.com/
Service plan costs: For an android smartphone, $39/mo unlimited talk, text and internet, including 4G. For a basic flip phone, $19/mo for unlimited talk/text. The details: You need to buy a phone from them, and if you want a fancy one, expect to pay up to $550. Android only, no iPhones. Shipping times are long, it might take 3-5 weeks for your phone to arrive. The 4G service is Clear Wimax, which sucks. (I would not bother buying a 4G device for this service - I think 3G is good enough.) Voyager uses Sprint's network. This is probably the way I'd go if I wanted an Android phone with unlimited service.

Option #2: Ting Mobile - https://ting.com/getting-started/
This is another Sprint reseller, run by internet company Tucows, based in Toronto. Good guys. Pros: They're hacker friendly, so while you do have to buy a phone from them, they don't care if you clone your ESN onto your personal iPhone, so you can use it on their network (if you know how to do that). They're friendly and responsive when it comes to answering questions on their web forums. Cons: The pricing model, while it can be significantly cheaper if you're a light cell phone user, involves doing your own math. They charge a base $6/mo per phone, then you add on various blocks of megabytes, texts and minutes. You could go data only with 1gig/mo for $30/mo. If you pick a large block of minutes (2000), a thousand text messages, and two gigabytes of data, you're up to $88/mo. Might as well stick with the post-paid plans if you're going to be a heavy user. Ting is another land of Android, no iPhone here. I probably wouldn't recommend Ting, unless you are a hacker or have unique pricing needs that might make the math more favorable. (Here find somebody else's thoughts on Ting Mobile.)

Option #3: Cricket Wireless - http://www.mycricket.com/iphone 
As of June 2012, Cricket Wireless says the iPhone 4S is coming any day now. They have their own network, but they utilize Sprint for 3G coverage. For $499 you can buy an iPhone 4S outright, then pay $55/mo for unlimited talk, text and data. They have a smaller network footprint, from what I can tell, so unless you live in a big city, this is probably not the plan for you. Perhaps not good for you, but maybe it's good for me. I'm intrigued by this. I want an iPhone, and I want inexpensive service. I'd consider this provider, though I don't know anybody utilizing them currently.

Option #4: Straight Talk - http://www.shopstraighttalk.com
This is TracFone Wireless behind the scenes, selling via Wal-Mart and online. No iPhone here, but a number of Android phones are on offer. You can pick up an LG Optimus Black for $329 and then for $45/mo you get unlimited talk and text, data/web access. I'm not sure who the provider is behind the scenes -- Tracfone is a reseller of service from Sprint, Verizon, T-Mobile and AT&T, so it might depend on which phone you get. This is the way I'd go if I wanted an Android phone and wanted the ability to be able to walk into a Wal-Mart to buy it, instead of having to wait to have it shipped to me.

Option #5: Virgin Mobile - http://www.virginmobileusa.com
In the US, Virgin Mobile is owned by Sprint. So this is Sprint's network, and you're actually buying the phone and any service directly from Sprint. They have a variety of Android devices, and the prices seem reasonable. They have announced that the iPhone 4 and 4S will be available as of June 29, 2012. If their current plan pricing covers the iPhone, you can get unlimited data and texting and 300 minutes for $35/mo or unlimited data, texting and minutes for $55/mo. You can save $5/mo discount by signing up for auto billing, meaning you can have an iPhone live and on the air for $30/month with a nice amount of minutes and unlimited data. This might be the winner for me, personally, since it's Just Plain Sprint behind the scenes, and not some third party reselling me somebody else's services. I think this is the way to go if you want an iPhone. When my Verizon Wireless contract is up, this is the provider I'll be looking the hardest at.

Doing the math: Starting from zero, plan out how much you'll pay in phone plans and devices over, say, two years. On Virgin Mobile, you'll pay $649 for an iPhone 4S, plus $30/mo for two years, for a total of $1369 over that period of time. For Verizon Wireless, you can get the same phone (or maybe even with more storage) for $299, but you're going to pay perhaps $90/mo for two years, for a total of $2459.

More fun with Sprint 4G/Clear Wimax

Just a couple of months ago, I made the jump to Verizon Wireless, right after they launched the iPhone 4. And let me tell you, I'm loving it. Verizon's network footprint is crazy huge -- way better than the 3G coverage I was getting on my iPad (AT&T) or any of my previous Android phones (on T-Mobile). Recently I had began to use tethering on the iPhone, using its 3g to connect my work laptop to the internet so I could work at the coffee shop (which had horrible wifi) or while on the road. After a while, I decided to see if my work would spring for a modem for me, so I wouldn't have to pay for that out of pocket.

They did, and I ended up with a shiny new Sprint 3G/4G modem a couple of weeks ago.

I've been using it mostly in my neighborhood (Rogers Park) here in Chicago, and the 3G connection is always solid, if a bit slow. But the Sprint 4G connection? Always poor. ALWAYS. Every single time I end up having some problem. The thing drops me after 10 minutes (or 10 seconds), or just doesn't connect at all. And when it's working, the time it takes to establish a connection is painfully long. It takes so long, I can visibly observe my fingernails getting longer before it establishes.

As you might already know, Sprint 4G is really Clear Wimax. We tried it as our home internet connection about a year ago, and immediately switched back to Comcast.

Now, it's a year later, and Clear Wimax 4G still sucks. It is just flat out the worst connectivity I have ever experienced ever. How is Clear still in business? How is Sprint still tied to this dog of a technology? Can somebody explain it to me? Who PAYS for this? I'm getting it free courtesy of my employer and I STILL want to return it.

4G: Not Ready for Prime Time

We recently tried Clear 4G (Wimax) internet service at home. Cost-wise, it's much cheaper than Comcast. We paid Clear about $70/mo for a home modem and a pocket USB modem (that supported both 3G and 4G). That's about what we were paying Comcast just for home internet. On top of that, I have a Sprint 3G/4G modem that I pay $60/mo for. My hope was that Clear could replace service from both Comcast and Sprint.

We really wanted to be out from under the Comcast near-monopoly. OK, Clear is partly-owned by Comcast (and is 51% owned by Sprint), so we're not exactly dealing with an independent, but we still wanted to try it. Truth be told, though, Clear was one of the worst internet providers I've ever had.

I had been thinking about it for a while. I already had the Sprint 3G/4G modem -- "Sprint 4G" is really Clear Wimax. So I figured that I was already experienced with the service. I mentioned on Twitter that we were considering making the leap, and a very helpful Clear sales rep responded to me via Twitter, offering to bring over a modem and set it up for us. We took him up on his offer, and he came over the next day.

The setup process was pretty painless. The Clear rep had a bit of trouble with his laptop, but it got sorted out, in the end. We tested our Roku box while he was there, and it was able to stream Netflix or Amazon videos just fine. So, we went for it, switched the home network over to Clear, and turned off Comcast.

Clear worked well....for about two days. Then we started having problems.

• You get knocked off line at about 4:00 pm just about every day. My wife always works from home, and I often do, so this is problematic. Losing connection to the client's Webex webcast mid-call is not a fun situation to be in.
• Speeds seem "OK" most of the time but seem to take a dramatic drop about 7:00 pm. From megabits to modem speeds. Or dead stop.
• Video streaming services like Netflix usually worked OK after forcing the Roku box to use a low bit rate. But, Clear just sort of "poops out" periodically. It couldn't keep up any sort of sustained bit rate. It's hard to watch a TV show when it stops every three minutes to re-buffer for another sixty seconds.

Keep in mind, a big part of Clear's advertising talks up streaming video and audio "anywhere you go." It wasn't exactly like we were trying to use the service for something other than what it was designed for.

I did a lot of research online, and called in once or twice. Theories for poor performance ranges from weather conditions, other users on the same Wimax cell splitting bandwidth, etc., but I was never able to conclusively figure out why performance was so slow.

We weren't expecting blazing speeds. I know it's wireless, and it's not going to be as fast as Comcast. But, we couldn't go a day without some huge irritating lag in the connection, web browsing slowing to a crawl, or continual re-buffering of streaming video.

So, we gave up, and called Comcast back to turn cable internet back on. Turns out, they "have to" send a rep out to re-enable internet service that had been off for no more than two weeks. Probably a bit less than that. But, whatever. They came out, they checked the wiring, they turned everything back on, and suddenly we're back to getting reliable 20 megabit connections over coax.

There's another thing to consider. When everything is working GREAT with Wimax, you're going to get about 1.5 megabits. When it's not working great, we were getting about .3 megabit (or nothing at all). Comcast, from its worst to best, was ranging anywhere from 3.5-20 megabit.

The latency is a lot higher with Wimax, obviously, but I didn't write down any of my ping test numbers, so there's not much useful I can share in that regard, beyond telling you that a wired connection is usually going to be better than a wireless connection.

Since then, I've picked up an Apple iPad with AT&T 3G built in. I'm not a huge fan of AT&T, but I figured it would be good for light use while traveling. In my random tests, I found that AT&T 3G is often faster than Clear Wimax (Sprint 4G).

In fact, it's about time for me to dump the Sprint modem. I use it mostly for reading the web while traveling, and now I can do that with the iPad.