Upgrade Your Life

How to Save $1000 on Cell Phone Data Plans

Upgrade Your Life

It's not the cost of the hardware that's keeping you from upgrading to a smartphone — it's the cost of the data plan, right? Or maybe you already have a smart phone and the monthly charge is killing you?

You're not alone. Smartphones can add $40-$60 a month per line to your phone bill, bringing it up to a national average of $107 a month! Good news: there are ways to cut your data bill in half.

Budget Carriers
Many budget carriers, including Boost Mobile, Cricket, Straight Talk, and Virgin Mobile now offer data plans — and the savings can be significant. For talk, text, and data, the average cost is $55 (that is an all inclusive number — all calls, all messages and all web). That's almost half the cost of traditional plans. Plus, they don't mandate a 2-year contract.

The budget carriers mentioned are all compatible with Android phones; some work with BlackBerries; and the big news is that Cricket and Virgin Mobile now offer iPhone pre-paid plans. Rumors are swirling that Boost Mobile will get iPhones later this fall.

The Catch
But with all of these carriers, there's a catch: you have to pay full price for a phone up front: we're talking $300-600 for a smartphone.

Even so, this can be a great deal for you. For example, you might normally pay $100-$200 up front for a smartphone (especially an iPhone) and then pay the national average of $107 a month for talk, text and data. With the budget option, you'd pay $450 for a Samsung Galaxy S2 or $500- $550 for an iPhone 4s, but then only $55 a month for talk, text and data. Over a 2 year period here's how the numbers could stack up:

Traditional Carrier:
iPhone 100
Voice, Text, Data $107/month x 24 months 2560
Total over 2 years 2660

iPhone 399
Voice, Text, Data $55 /month x 24 months 1320
Total over 2 years 1719

The other iPhone option, Virgin, has a slightly different structure and adds up to $1,369 for 300 voice minutes, unlimited texting and 2.5 GB of data. Bottom line: While you pay more up front, the total costs are much lower.

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But what if you already have a smartphone?
In some cases, you can use the phone you purchased two years ago at a subsidized rate through a traditional carrier. You will need to have passed out of the contract period so you can cancel your service and unlock your phone.

Unlocking your phone entails calling the carrier and asking them to help you with the process, although this article shows how to unlock a phone completely via the web. Then you need to confirm your phone will work on your prospective carrier's network.

Check Compatibility
Different carriers use different frequencies (think AM vs. FM radio). Generally, there are two types: CDMA and GSM.

  • TMobile and AT&T use GSM
  • Verizon, Sprint and most of the budget carriers use CDMA.

You cannot get a CDMA phone to work on a GSM carrier. I strongly recommend calling the carrier you are considering to verify your phone will work on their network.

Cricket told us you can bring an existing phone for use with their plans, "but it'll cost you a $15 activation fee, plus an $85 charge to "flash" your phone," after which they don't guarantee your phone will work. But from all the data on user forums this seems to work out fine.

Using a Verizon phone on Virgin Mobile does not seem to be possible though. The company told us "Thank you for your interest in Virgin Mobile! I apologize, but unfortunately devices from other carriers and unlocked iPhones and other unlocked phones are not compatible and would not function on our network."

For some reason, all this carrier business around the iPhone is TOUCHY and no one is very forthcoming with info about what carrier switching is possible, though T-Mobile confirms they have over 1 million unlocked iPhones running on their network. They explain, "T-Mobile currently offers microSIMs for customers who already have a GSM phone they want to use on the T-Mobile network, including an iPhone. In order to set up an unlocked iPhone on T-Mobile's network, customers simply need to purchase a microSIM card and select a T-Mobile Value Plan that suits their needs."

A few other considerations about budget prepaid carriers:

  • Some offer 4G data speeds, but most are running on the slightly slower 3G networks.
  • Some will give you 4G data speeds for a preliminary amount of data each month, and after that they will throttle or slow down the speed of the data you consume.
  • Check the coverage maps; some carriers have significantly minimized areas of coverage especially for data.

Finally, it's not in your provider's interest to make changing plans easy. But with costs for smartphones as high as they are, figuring out a prepaid solution may be an excellent investment of your time.

I welcome any your personal experiences with budget carriers or helpful hints in the comments below.


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