Many Wireless Subscribers Are Going Commitment-Free

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News Posted: Sun, May 16 2010 9:45 PM

There has been a significant increase in the amount of people that are opting for commitment-free cell phone plans. According to the New Millennium Research Council, about one in five Americans with a cell phone is using a prepaid plan. In addition to the benefit of not being tied to a contract, many users have found prepaid plans that cost less per month than contract plans.

Many of today's most popular phones such as the iPhone and DROID require a contract. Given the cost savings, many customers are foregoing the "cool" phones and opting for a basic phone without a two-year contract and a lower monthly fee.

A prepaid plan with unlimited calls and text messages is available for $45 per month. That's approximately half of what you'd pay on a two-year contract for a similar plan through Verizon Wireless or AT&T. Furthermore, many prepaid users don't need unlimited talk and text messaging as part of their plans. Customers at Tracfone, the largest independent provider of prepaid service, pay an average of $11 per month. Other users have found prepaid accounts with a small amount of minutes and unlimited text messaging best suit their needs.

In the past, prepaid plans were primarily marketed towards users who did not qualify for contract-based plans due to poor credit. As the economic recession has forced many people to cut costs, prepaid service has become more appealing to many users. In addition, many prepaid services have begun to offer better deals in recent years.

Considering there aren't a lot of new customers who are willing to sign contracts, it's possible prepaid service will get even more attractive due to greater competition. In the first quarter of this year, the seven largest wireless carriers in the U.S. expanded the total number of contract subscribers by just 230,000 people. In comparison to the entire customer base of 280 million, that number is fairly negligible. The seven largest prepaid carriers added about 3.1 million new subscribers in the first quarter. These trends have changed over the past couple of years. Two years ago, wireless carriers added 3 million subscribers under contract, and 2.3 million to prepaid plans.

The prepaid wireless market changed dramatically in January 2009 when Boost Mobile announced  a prepaid plan with unlimited minutes for $50 a month. Since then, Virgin Mobile, Tracfone, and a few other carriers have announced similar offerings.

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realneil replied on Tue, May 18 2010 8:55 AM

Prepaid is growing because people are beginning to understand what a total ripoff cellphone contracts really are. They cost too much and tie you up for at least two years. It's a win-win situation for the carrier, and the total opposite for the consumer. Having the freedom to cancel service at anytime is well worth not having the latest cell phone bling to me.

Our trying financial times are slowly turning our values around and pointing them towards a more practical approach to life. We may still be buying nice things, but we expect more for the money and suffer the gouge far less than before.

Don't part with your illusions. When they are gone you may still exist, but you have ceased to live.

(Mark Twain)

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Rosie replied on Wed, May 19 2010 8:13 AM

I gave up my cell phone contract and went prepaid with Net10 and I can't believe how much money I'm saving! This year alone I will save over $800.00 which is a fortune to me and it's not just the 10c per minute or the 5c per text, but the no roaming fees or hidden expenses make a big difference. I also find I'm more careful how much I use my phone now I'm on prepaid and the big bonus is I have no cell phone bill at the end of the month!

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I have to agree with the previous posters - prepaid is totally the way to go for savings and real consumer freedom. Contract carriers seem to find new fees everyday to include on your bill and I finally just had to suck it up and pay the cancellation fee and go prepaid and the savings are totally worth it. I decided on Net10 prepaid because I heard the deals where great and their combonations of monthly plans and pay-as-you-go is totally refreshing. I dont't have to wrry about extra fees or being tied to a contract each month and I can actually have minutes for as low as $15 a month. If you can really live without your IPhone, then a dependable company like Net10 really is a great option and helps give consumers control.

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Leahkh replied on Thu, Jun 3 2010 2:59 PM

PlatinumTel is one prepaid provider to consider for valuable, flexible plans. Their new Real Paygo plan is an a la carte plan that has the cheapest rates in pay-as-you-go, allowing users to pay only for the services they use and avoid commitment. Talk is just 5 cents a minute, text is 2 cents a text and 10 cents per megabyte of web service. This is half that of other carriers’ rates! If an unlimited plan is preferred, PlatinumTel’s is just $50 for talk and text and an extra $10 for unlimited web.

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I've dropped my cellphone completely. I keep a prepaid phone in the car for emergency, but I always felt like I was getting ripped by the carriers. Jen and I were paying $100 + a month for phones and every month it seemed like there were some other random charges. You go to the store or call about it and they try to talk you out of anything you do or confuse you. I wanna take my plan down to 400 minutes a month. But you will lose your 10,000 roll over minutes. WHY THE HECK DO YOU THINK I HAVE SO MANY ROLLOVER MINUTES?  transfer repeat conversation.

I don't miss my cell one bit. I never answered people until I got home from work or errands anyway.

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