Ins, outs of prepaid cellular service
Pre-paid wireless-phone service is no longer an embarrassing back-of-the-store
transaction for those lacking sufficient credit history to qualify for
conventional monthly contracts.
Four of the five big wireless carriers nationwide -- AT&T,
Cingular, Verizon Wireless and VoiceStream -- now offer pre-paid plans, and the
fifth -- Sprint PCS -- offers a variation on the theme.
There's also a company called Tracfone
aggressively marketing pre-paid wireless service through major retailers such as
Amazon.com, Best Buy, CompUSA, Circuit City, Target and Wal-Mart.
For someone who doesn't want to talk a lot -- able to limit themselves to
less than one hour a month -- pre-paid is more affordable than monthly
contracts, with fewer hassles in starting or stopping service.
Pre-paid is getting new attention from wireless companies because all the
low-hanging fruit has already been plucked: 128 million Americans now have
wireless phones, according to the research firm Yankee Group, or 42 percent of
the population.
Almost everyone who wants a mobile phone and can afford one already has one.
That leaves two big groups to pursue: those who can't afford one, delicately
described as "credit challenged" in the industry, and those who don't
want one because of the cost or restrictive contracts.
Pre-paid, obviously, works for both.
The good news for consumers is that pre-paid costs are way down -- most
phones for pre-paid plans cost less than $100, and most airtime costs under 60
cents a minute. Both numbers were much higher a few years ago.
Nor are pre-paid customers stuck with second-class service. Most pre-paid
phones on the market today are digital, rather than the older analog models, and
pre-paid service includes popular extra features such as voice mail and free
long distance.
I've long recommended mobile phones to everyone as an important tool for
safety and convenience. In a genuine emergency, a mobile phone can literally be
a life-saver. In many other everyday crises -- you're driving around a strange
town and need directions, you need to tell the boss you're running late for an
important meeting, etc. -- a mobile phone can easily justify its cost.
But I'm also aware that many people don't like the idea of adding a monthly
fee of $25 to $30, the minimum for conventional monthly wireless service, to
their already stretched budgets. So I'm pleased to see pre-paid emerge as a
reasonable alternative.
I researched the offerings from AT&T,
Cingular, Sprint PCS and Verizon Wireless, and I went a step further with
Tracfone -- borrowing one of its phones and trying out the service for several
days. (I didn't include VoiceStream, which has a pre-paid plan called EasySpeak,
because the company doesn't serve California. Nor did I include Nextel, which
sells a business-oriented mobile-phone service, because it doesn't have a
pre-paid plan.)
Here's an overview of what I learned:
Most mobile-phone users are billed under a system that could be called
"post-paid." You sign up for a year or two of service and receive a
monthly bill for the airtime used in the previous 30 days. You typically get a
"bucket" of minutes up front -- perhaps a few hours of talk during
weekdays, and a larger number for nights and weekends. If you exceed the amount
in your bucket, you must pay for the extra time.
Pre-paid turns the equation around. You buy a block of minutes up front and
then start using them. Before the block drops to zero, you buy another block.
Most pre-paid plans sell these blocks in set amounts between $10 and $100. The
bigger the block you buy, the lower the per-minute cost.
The one catch with most pre-paid plans is that these blocks expire in 30 to
90 days. You lose what you don't use, and your service is cut off if you don't
buy another card before the expiration date.
Still, pre-paid can be much less costly on a monthly basis than even the
least expensive post-paid plans.
Exact comparisons are difficult because rates change frequently, and both
pre-paid and post-paid plans often come with promotional deals. But, as of
mid-December, the least expensive pre-paid plan appears to come from Cingular,
which sells a $20 card that stays active for 90 days -- or $6.67 a month.
Cingular charges 35 cents a minute during weekdays and 10 cents a minute on
weekends, so a $20 card provides anywhere from 57 minutes to 200 minutes of talk
time.
AT&T's Free2Go pre-paid plan
and Verizon's FreeUp are at the high end, with respective monthly minimums of $16.65 and $15.
Tracfone, however, lets customers jump off the activation treadmill with a
new plan called Plus3. For $99.99, the Plus3 card keeps service active for a
full year, provides 100 minutes of talk time, and provides a bonus of 20 minutes
whenever users buy cards for 30 minutes or more of additional airtime.
SprintPCS doesn't offer a true pre-paid option. Instead, the company has a program called Clear
Pay that lets customers sign up for any monthly plan regardless of credit
history. In exchange, Sprint PCS retains the right to immediately terminate
service if bills aren't paid promptly and may demand an up-front deposit. The
benefit for Clear Pay subscribers is access to the same low per-minute rates as
post-paid customers.
I borrowed a Nokia 5180i digital phone from Tracfone that sells in stores for
$99 to $129; Tracfone also sells semi-obsolete analog models for less, but I
wouldn't recommend them -- you're more likely to get busy signals and you won't
get voice mail. The six-ounce Nokia phone has all the features most users would
ever want, including two hours of talk time and four days of standby time from
its rechargeable battery, storage space for 99 frequently dialed numbers and
support for Caller ID.
Tracfone provides free voice mail in most parts of the country, including the
San Francisco Bay Area, and you can check messages from a regular wired phone to
keep from depleting your block of airtime minutes.
Setting up the Tracfone took about 15 minutes, following simple instructions
on the company's Web site. Those without Web access can set up the phone by
calling a toll-free number and listen as a recorded voice walks them through the
process. You then are assigned a phone number with a local area code.
When you buy more airtime -- either from a store or through Tracfone's Web
site -- you go through similar steps that take only a few minutes, either on the
phone or online.
There are no long-distance charges with Tracfone. If you travel outside your
home area, however, every minute of talking deducts two minutes from your block
of remaining minutes. Home areas are defined generously -- Northern California
subscribers get the entire Bay Area and the Central Coast as far south as Santa
Barbara.
The Nokia's home screen -- what you see when first turning on the phone and
when ending a call -- lists both the service expiration date and the number of
minutes remaining. You can add more airtime at your convenience. If your
expiration date is Jan. 15, for example, you can put in more minutes on Dec. 28
and the expiration date will move forward to Feb. 15.
Once I got the Tracfone set up, I found it worked like any other wireless
phone -- sound quality was good, and reception was strong wherever my own
Verizon Wireless phone had strong reception. This wasn't a surprise, since
Tracfone leases airtime from Verizon Wireless in Northern California.
My only complaint was a restrictive "grace period." Tracfone
charges for outgoing calls after 15 seconds have elapsed -- not enough time to
avoid losing a minute if you suddenly realize you've made a wrong-number call.
Incoming calls are charged from the moment you press the "answer"
button -- so, again, you lose a minute even if you receive a wrong-number call.
Otherwise, I was favorably impressed with Tracfone's easy-to-understand
approach and quality of service.
So is pre-paid wireless service for everyone? Absolutely not. If you want to
talk regularly on a mobile phone, as many people do, post-paid monthly service
is a much better deal.
But for those who don't need to talk a lot, or can't qualify for post-paid
plans, pre-paid is the way to go.
