Mobile Service: No-Contract, No Problem

Christian MacAuley, June 22, 2012 

I’ve used three mobile phone services in the past three years and am now devoted to using no-contract phone service. This is mostly because I realized that a mobile phone contract pretty much always costs more in the longrun than just buying your own phone and service ala carte.

Here are some mobile services I’ve used:

• AT&T (with contract)
• T-Mobile US (No-contract)
• Straight Talk (No-contract)

The first carrier I used was AT&T, which provides excellent coverage in my area (Washington DC Metro). I had been using AT&T with the usual arrangement — free or subsidized phone with a one-to-two year contract, then monthly payments — since I got my first mobile phone in 1999. At the beginning of 2011, my contract was ready to renew, meaning I could get a new subsidized or free phone. But the monthly bill for my smartphone (an iPhone at the time) was over $80/month. This still didn’t get me enough data or text messages, although it did include far more calling time than I ever used. I was also seeing a lot of new Android phones come on the market and was hankering to leave my iPhone behind for something shiny, new, and different.

So I bought a new unlocked Sony Xperia Mini Pro and was ready to move on to no-contract service. At the time when I left AT&T, their no-contract phone service was $50/month for unlimited talk time and text messages. This did not include data service. The data service would cost $20 or more a month extra, so in spite of providing good service, AT&T wasn’t a cost-saving option.

I found T-Mobile US had an awesome plan — $30/month for unlimited texting and data (up to 5GB) with 100 minutes of talk time. That sounded great! I tried it for a few months and had two serious problems. First, my internationally unlocked mobile phone didn’t support the somewhat unusual bands that T-Mobile US uses, which kept me from getting 3G data speeds. (It took some research to find the real problem, so I wrote a blog post about that.) The second problem was that I started using more than 100 minutes of talk time a month, and with T-Mobile Prepaid, I paid an extra $0.10 for each additional minute. Ultimately, I was paying around $35-40/month for T-Mobile Prepaid and didn’t really have mobile broadband on my phone. T-Mobile’s actual coverage was reasonably good — not great — in my area, but my phone wasn’t fully compatible with their network. I had to look for another provider. 

What I found was Straight Talk, a provider that seems to provide something like wholesale AT&T services. For $45/month I got service fully compatible with my unlocked phone plus unlimited talk time, text messages, and data service. (I suspect the data service is throttled after a certain point, but I don’t think I’ve reached that point yet.) After several months using this service, I’m very happy with it. It’s a little rough around the edges on professionalism — for example, they’ll send you text messages saying, “Thank you for ur payment” — but overall I’m happy and am saving a lot of money over my old AT&T plan.

Internationally, I’ve tried a few other carriers. A UK company, O2 provides great mobile service. They also provide SIM-only and pay-as-you-go service (this is much more common outside the US). They sell some of the nicer phones on contract, too. The mobile phone service I’ve used in Germany is T-Mobile (basically a different company from T-Mobile US) which also had an easy-to-use SIM-only service. If you plan ahead, you can buy a SIM from these companies before you travel there. I didn’t do that — I got my SIM cards in the train station without much trouble.

Ultimately, if you’re willing to pick out your own phone and pay for it upfront, then wait a year or two before you get another phone, you’ll probably save a lot of money in the end. And in addition to the flexibility you’ll gain to try new carriers, you might find yourself with a cooler, more interesting mobile phone to boot.

I believe that in five years, far more mobile phone consumers will have switched to the no-contract phone service model, and I’ve seen some evidence to support this claim. I’ll update this page in the future if I have more thoughts on the no-contract mobile trend … or if time and experience prove me wrong.