The Real Cost of Prepaid Wireless (10/2001)

[KevinJames]

Setting aside the cost of the phone (which is usually higher for the prepaid offer than it is for the contract plan), lets consider the cost of PrePaid.

Depending on where you are calling from (home area or outside the home area), AND where you are calling to (local call or long distance) AND the time of day you are calling AND the restrictions put on you by the company you choose you could pay: 60 cents per minute for air time, 25 cents to a dollar for a long distance call and 50 to 80 cents for roaming charges. When you add that up, you are close to two dollars for a call.

Now just because you prepaid for the minutes doesn't mean you can keep those minutes forever. One of the restrictions is that the prepaid term expires. If you still have time left on the card, too bad. That restriction alone adds to the total per-minute cost. What I mean is, if you only used 75 percent of the value of the card before it expires, you can add the lost value to the total cost of the calls you made while that prepaid term was active. If you had a 25-dollar card and only used 75 percent of it, that means you just lost $6.25. If you made a total of 10 calls in that prepaid term, then $25 divided by 10 calls means that prepaid service cost you $2.50 per call (averaging).

How about the service itself? If you plan on traveling using a prepaid phone service, don't expect to be able to receive calls. ATT openly states that they do not support incoming calls on roaming prepaid phones. Oh, and if you are roaming, they won't permit you to place outgoing calls unless you have provided them your credit card number.

What about Verizon? There website indicates their prepaid plan (named: FreeUp) has limited city coverage. Though the cost structure seems a bit simpler, it still is not cheap. All FreeUp terms expire in 60 days. From 6AM to 9PM it is 35 cents per minute but this includes long distance. If you are off their network (again, you need to see which limited cities they cover for FreeUp), then it is 99 cents per minute and I assume, though it is not stated, that long distance is not included in this scenario. (Off-peak is only 10 cents per minute.)

Finally, there are a couple upstarts that may bring some competition the market of prepaid wireless service. HopOn.com is one such company that will offer disposable cell phones. ZDNet wrote an article on this back in August but as of now, it has not hit the market. See article:

ZNet Article (Click Here)

Kevin

[Tony]

Prepaid plans are economically the way to go ONLY if you use around 25-30 minutes a month. (Emergency use, ect.)

They are no longer the way to go if you have bad credit. (Go with Sprint's no deposit offer, or if you don't like Sprint just cough up the deposit. You get it back in a year, with interest.)

Used to, AT&T offered the best prepaid plans out there. Not anymore. The new Free-up plan, besides being cheaper, easier and having a larger usage area, also most importantly offers a trimode nokia 5185ipp with their prepaid service. Why? Because they want you to, down the line, convert to a contract monthly fee service. (Which is only available with trimode phones, w/ one exception that I won't go into here) And monthly fee services are the way to go for anyone that uses a cell phone signifigantly.

From the sales person perspective, by the way, he earns the same commissio on prepay that he does on a contract service. So if you talk to a sales associate about your needs, there should be no behind the scenes motivation for him to push one contract service over prepaid. (This has also recently changed.)