Created on Thursday, 14 August 2014 Written by ANICK JESDANUN, AP Technology Writer
MALVERN, Iowa (AP) — As my two-year contract with Verizon came to an end last month, I had to resist the company's various promotions and discounts.
In accepting the offers, I'd have to give up Verizon's unlimited data plan, which lets me use the phone's cellular data connection as much as I want without overage fees. It's so good that both Verizon and AT&T have been phasing it out. Existing customers have been allowed to keep those plans, but they get kicked out once they accept these offers.
I am paying more to keep my unlimited plan, so I'll have to explain my reasoning. Whether or not you're still on an unlimited plan, you'll have similar things to consider when your phone contract expires.
— Should I keep the unlimited data plan?
AT&T stopped offering unlimited plans to new customers in 2010, and Verizon followed in 2012. An undisclosed number of customers have kept those plans, but once they leave, they aren't allowed back.
Verizon has further enticed customers to switch by ending subsidies on new phones. That means customers like me have to pay full retail price, or about $650, for the latest high-end phone, even after the contract is up. Usually, it's $200.
New customers get a set amount of data to use each month, typically 2 gigabytes for a single phone line. Even with my unlimited plan, I rarely go over that amount. Yet I'm reluctant to cede it.
Beyond paying more for the phone, I'm paying about $10 a month more for voice, text and data compared with current rates for 2 gigabytes. I don't even get unlimited calls or texts — just data.
It's as though I'm throwing away money.
But that extra cost gives me peace of mind. I'm able to rely on my phone any time I have trouble with my wired broadband service at home. I'm able to visit friends without needing their Wi-Fi password. I can't use the phone as a Wi-Fi hotspot, but I can use it instead of my laptop for Web surfing.
I'm also recouping some of that cost in my travels. I avoided paying $45 for three days of Internet access at a San Francisco hotel. Between that stay and a daylong train trip down the Pacific Coast, I used nearly 6 gigabytes for streaming video.
I also consider the extra cost to be insurance. I have no idea what high-data apps and services might come along. I wasn't streaming video much when the two largest carriers stopped offering unlimited plans. Now, that's my primary way of watching television.
Families that want to share a pool of data will have to switch to a limited-use plan, as will individuals who don't want to pay for something they might not need. Not everyone will consider the extra cost worth it.
Unfortunately, Verizon will soon slow down service for its heaviest users — the top 5 percent — when there is congestion in a given area. It has already been doing that for 3G service and will extend that to higher-speed 4G network in October. I'll have to see how that affects my streaming.
AT&T already has been slowing down service once users reach 3 gigabytes or 5 gigabytes depending on the phone. Unlike Verizon, AT&T still allows unlimited-plan customers to get subsidized phones with a two-year contract extension.
— Should I switch carriers?
T-Mobile and Sprint still offer unlimited plans. So why not switch, especially as T-Mobile also offers perks such as free data service when traveling abroad?
Unfortunately, T-Mobile and Sprint can be slow or unavailable outside major metropolitan areas.
What I saw near Malvern, Iowa, during a cross-country train trip was typical of my experience searching for signals in rural America: Verizon and AT&T offered two or three bars on 4G. Sprint had no service, and T-Mobile offered a slow-speed network.
That doesn't mean AT&T and Verizon are always better. During checks east of Grand Junction and Glenwood Springs in Colorado, AT&T and T-Mobile had limited service, while Verizon and Sprint had none at all. Farther east, though, AT&T was the one that cut out.
This is another way of saying the right carrier for you depends on where you use the phone. But even if service is good at home and work, you'll likely want service when you travel or visit friends.
For me, Verizon has been dependable, and there's no reason to fix what isn't broken.
— Should I extend my contract for another two years to get a better deal on phones?
Although this isn't an option for me, it's an important consideration for others as wireless carriers encourage you to pay full price, spread over several months under installment plans. In doing so, you forgo about $20 a month in subsidies for a high-end phone.
If you pay the entire cost upfront, you get an unlocked version that you can often move to competing carriers or use with cheaper, local services when traveling abroad. With installments, you typically have flexibility to upgrade your phone before it's fully paid off by trading in your old one. Sprint stopped offering that, though.
Verizon and AT&T give you discounts on monthly bills if you choose the installment plan, known as Edge or Next. T-Mobile requires all customers to pay full price, so it has already baked in the discounts. With T-Mobile, to upgrade before your phone is fully paid off, you'll need to pay $10 a month extra for Jump, which also gives you insurance for loss and damage.
Although the discounts are typically less than the subsidies you're forgoing, it's the reverse for plans with at least 10 gigabytes of data. So big families sharing lots of data are probably better off with a full-price plan. That's also the case if you don't need a high-end phone, as the monthly fees for voice, text and data services factor in the costs of subsidizing the most expensive phones.
Otherwise, you're better off with a subsidized phone. But be sure to upgrade right at the two-year mark, or you'll pay more overall in monthly service fees without getting the benefits of subsidies.