Contracted vs. pre-paid wireless

Moderated by Andrew Nusca | February 11, 2013 -- 07:00 GMT (23:00 PST)

Summary: Do unlocked devices spell doom for crappy carrier lock-in?

Denise Amrich

Denise Amrich




Christopher Dawson

Christopher Dawson

Best Argument: Pre-paid


Audience Favored: Pre-paid (95%)

Closing Statements

You'll be giving lots more free tech support

Denise Amrich

Chris makes some great points, and definitely has the popular vote behind him.

But I think that one important thing to remember is that the ZDNet audience is comprised of some of the most tech savvy folks on the planet. You may love the freedom of unlocked phones, and almost intuitively understand how they work, or have the technical ability to come up to speed without much hassle.

But the beloved folks in your lives who are more like the "Luddites" Chris mentioned in his answer to the last question are going to be putting more of a tech support load on you when they stop going to the AT&T Store or the Apple Store to see the Genius because they like the idea of paying less for their phone service.

Freedom isn't free. Someone is going to pay for the trend towards prepaid, no-contract unlocked phones, and it's going to be you. One way or another. Probably with the unpaid time and frustration of getting lots of phones up and running for people who don't really want to hear about how they work, or learn how to responsibly handle problems that arise by themselves.

I checked out the snazzy Nexus 4 that Chris Dawson mentioned. After all, I like my Nexus 7 well enough. Although there is plenty of information about how to buy dumb apps from the Google Play store, the only information I can readily locate on the website about finding a provider is the ominous sentence, "Purchase Nexus 4 directly from Google Play, with no carrier commitment or contract."

So our friends and families will have a $300 brick and a huge homework assignment of how to find a carrier, read the fine print on whatever non-contract paperwork they're required to sign, be freaked out by the decision making process, and lean on us. And when things go wrong, as they so often do, it'll somehow become your fault for giving bad advice, and your job to fix it. It's a good thing you all love no-contract devices so much, because you'll be configuring (and re-configuring) a whole lot of them.

Welcome to the wonderful world of contract-free mobile. How much will you already-overburdened techies be able to charge for the tech support that used to be included with the contracts your friends and families once had? I'm guessing nada. Have fun!

Long-term wireless contracts stink

Christopher Dawson

You can say all you want about representative samples and selection bias, but as of Tuesday afternoon, 93% of the votes in our Debate favor the long-term success of pre-paid vs. contracted wireless service. Why? Because long-term wireless contracts stink. They represent indentured servitude to unresponsive, monopolistic wireless providers for the price of a discounted phone. These same providers then charge more per month for capped data than pre-paid companies charge for unlimited. Nobody cares about voice anymore but the big 4 providers are happy to charge a pretty penny for that, too.

No thank you.

Yes, there will be challenges, especially in bringing this model to the enterprise, but long-term, the ability to better manage end user bandwidth needs, optimize the user experience, and obtain the best hardware to meet users’ requirements, all while saving money, will kill the dreaded contract and make pre-paid wireless the method of choice for both consumer and enterprise wireless.



Most people know where they stand

Andrew Nusca

Denise did her best to argue the more difficult position, but in the end, it became clear that even she could support the pre-paid cause. For that, I must give Chris -- and the popular vote -- the nod.
But there's a big asterisk on the pre-paid market, and that's the IT organization. "Procurement becomes an issue," Mr. Dawson said during the rebuttal stage. That's a big blocker here: the traditional one-stop-shop mentality that IT harbors is at risk here, even though most consumers focus on the impact of contracts on their wallets.
Nonetheless, most people know where they stand. As BYOD takes over the enterprise, those people might find themselves on the same side as IT for once. And wouldn't that be nice?


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  • Who in their right minds thinks contracts are a good idea?

    Who in their right minds thinks contracts are a good idea?

    Seriously, who?

    It's practically a form of slavery.

    For two years you rent a device. If you quit ahead of time, you pay through the nose. If you go over your limit, you pay through the nose. If you "roam" outside their network, you pay through the nose. If you do anything they don't like, you pay through the nose. They have a million ways of taking money out of your pockets.

    And don't get me started with news outlets who preach the idea that the up-front cost is "the price of the phone" when they know full well IT'S A LIE, because you're paying for it via the plan.

    And don't get me started with limiting total bandwidth per month. It *should* be like what you get when you buy Cable or DSL: Pay for speed tiers, and the company reserves the right to shape bandwidth to ensure quality internet for all.

    Instead, we get "caps" which are a really crappy way of dealing with the limited bandwidth issue. If you go over, you pay through the nose. And forget doing anything like watching video or installing apps. Wait until you're on WiFi for that. And make sure your phone doesn't silently switch to your data plan while watching that video. I've been hit by that more than once.

    Contracts are IMO the result of cell phone companies basically having an oligopoly. They can do it because they know you basically don't have a choice - because all of the others are doing the same thing.

    Frankly, I'd like them to act more like my local Cable or DSL: Give me a single monthly price, allow me to use whatever bandwidth is available in my area, and throttle/shape my bandwidth if I'm in a city or someplace with a heavily used network.

    That's IMO the ideal. But apparently the main street friendly way is not the way to make the wall street people happy. So main street loses, again. It's all about the profit, and nothing about the customer.

    And boy they do love to exert their oligopoly control: Recently, I moved back to the USA from a foreign country. Thanks to a military clause, I was able to end the contract with the foreign cell phone service prematurely without penalty.

    Getting the device unlocked? Not part of the clause. So guess what? I have an iPhone that can't be used as a phone until August. It's a fancy iPod touch, for all intents and purposes.

    We need to give these companies a wakeup call. We really do. Maybe even throw some antitrust law around a bit more.

    Yeah - from now on, I'm likely to go prepaid. Especially now that the iPhone is available unlocked. My next phone is not gonna be contract.

    I *hope* they spell doom for contracts. That would be great.

    But, alas - I know better, sigh. They're not gonna give up on contracts that easily. They want to keep that $$ rolling in, even if it means screwing the customer. Because it keeps wall street happy. And their money does come from wall street.
    Reply 12 Votes I'm for Pre-paid
    • I'm not following Denise's argument . . .

      "However, for those of us who like the enhanced productivity that comes with making a decision to commit to a carefully researched, decent quality system that is appropriate for our needs, it's nice to not have to learn how to use a new phone every five minutes when our no-name carrier does something cheesey that makes us go off in a huff."

      I did my research. And my carrier is not "no-name," it's pretty much everywhere. It's only "no-name" because tech publications do a lousy job of covering pre-paid carriers.

      "You're going to pay one way or the other. "

      True, but contracts are very deceptive. And they currently have what amounts to an oligopoly. Which means that everybody has basically the same lousy business practices, which ensures you get lousy service no matter what provider you choose.

      "the house always wins."

      *IF* the house is an oligopoly or monopoly. If there's competition on price, the consumer wins.

      And you know what? If you can switch carriers within a month or so, that means that you can easily vote with your wallet.

      It's not so easy to vote with your wallet when the end of your contract is over a year away.

      Easier to switch == more voting with your wallet == more competition == win for consumers.

      "It's about devices like tablets with 4G in them. These have to connect to the corporate networks in the companies where most of us have to work in order to pay for all the electronic gadgets we love so much."

      Uh, no, I don't plan on connecting my personal device to a corporate network. Work and personal life are staying separate for me. I don't want the headaches that come with crisscrossing my work and personal life. I certainly don't want to give any business the ability to remote wipe my personal phone.

      If they want me to bring my own device, I'm liable to buy the cheapest piece of junk that's still considered acceptable. Because I ain't making my personal device my work device.

      "So, the security of reliable carrier lock-in with reputable vendors is here to stay."

      It's no more "secure" nor "reliable." At least I haven't seen any evidence of that. In fact, I'd say just the opposite: They have a million ways to charge me extra, and will drop my service at the first time of trouble.

      They don't word the contract in a way that prevents *THEM* from doing whatever the he** they want. They word it in a way that prevents *ME* from doing whatever I want.
      Reply 4 Votes I'm Undecided
      • And now she pulls out a tech support argument . . .

        "But the beloved folks in your lives who are more like the 'Luddites' Chris mentioned in his answer to the last question are going to be putting more of a tech support load on you when they stop going to the AT&T Store or the Apple Store to see the Genius because they like the idea of paying less for their phone service."

        I don't think Apple ever sad they'd stop repairing phones that were bought unlocked to use on StraightTalk or whatever, and I'm sure the pre-paid folks will support their own services.

        In any case, it's not like a phone needs a whole lot of support anyways. It's not like a PC where you may have to deal with things like the registry or file system or some sort of other backend stuff, because that stuff is generally unavailable to even power users. They're very straightforward devices, and this idea that you'll be providing continuous support, even if it's because you switched from contract to pre-paid, is rather bogus.

        "Freedom isn't free."

        No, it isn't, but without a two year lock-in, I think that there's gonna be more competition on price, which will keep prices lower. The companies are probably getting larger margins on the two year contracts because they know you can't easily switch to a competitor.

        "Although there is plenty of information about how to buy dumb apps from the Google Play store . . ."

        I dunno about the Play Store (iPhone here), but buying apps is easy at the iTunes store. You just tap a button and enter your password. 99% of people don't need any instructions other than to show them that you buy stuff from the store. And it doesn't change regardless of whether your device is under contract or not.

        You act as if somehow this were some complex procedure that nobody could figure out. Are you serious? It's not.

        "So our friends and families will have a $300 brick and a huge homework assignment of how to find a carrier, read the fine print on whatever non-contract paperwork they're required to sign, be freaked out by the decision making process, and lean on us."

        Well, now you have things a bit backwards. You generally find the carrier before you buy a new phone. Unless you have an existing phone or are really into a single brand of phone.

        And you know what? MY CONTRACT LEFT ME WITH A BRICK.

        Yup. That's right. I got out of the contract, but they won't unlock the stupid phone until August. All I have right now is a fancy iPod Touch. Guess who has some really, really horrible fine print? The contract.

        Granted, it was a foreign carrier I was under, so maybe in the USA things work a bit differently, but it does show the kind of shenanigans monopolies are willing to pull on their customers.

        "It's a good thing you all love no-contract devices so much, because you'll be configuring (and re-configuring) a whole lot of them."

        LOL. Not really. You're just trying to find ways to discredit them now. Pulling at straws, so to speak.
        Reply Vote I'm Undecided
    • You have a choice

      You don't need a cellular phone. Very few do. Vote with your wallets people.
      Reply 3 Votes I'm Undecided
  • Im for Pre-paid also

    I recently upgraded my Pre-paid cell(which I still have and use each month...@$16.25 per month for two phones on a family plan you can't beat it) to the Straight Talk Samsung Galaxy Proclaim. I have had it nearly two weeks and still haven't been able to use it because it is my first touch type device and it is hard to learn as Straight Talk now has the much more expensive Iphone and is not supporting the one I bought which was their previous favorite seller..getting to tech support can be nearly impossible and finding apps for this Proclaim is not easy either. I will conquer this but it will take time and patience and mean time I do not have a contract!!!!
    Reply 3 Votes I'm for Pre-paid
  • Going prepaid after 23 years of cell service with a contract!

    Purchased my first semi-brick phone with service in 1990. Been on contract ever since...
    However, when I did some basic calculations I discovered how irrational post paid service is:

    They make you think that you are buying a phone for $200, but don't tell you that the balance of additional $400 you will pay over the next 24 months.

    You are stuck with a 2 year contract, and are drooling with a sight of a new terrific phone introduced a week after you signed up.

    They do you a favor by letting you sign up for a new phone and CONTRACT after 18 months for ADDITIONAL 2 years.

    And that just for starters.

    My most recent contract with AT&T (ending in 2 weeks) cost my wife and me about $150 a month with 550 minutes to share, unlimited text and 2GB data per phone. Yes, we get free evening calls, free weekend calls and free calls to any AT&T wireless number.
    But when I analyzed our calls I discovered that on average, each of us, including weekends evenings etc. is using a total of 165 minutes a month!

    We were lucky to buy our HTC Inspire 4G phones for $50 each two years ago. So how much our contracted cost is? $100 + tax for two phones, $3,600 for service and almost forgot: $72 for “activation” of the service. Grand total of $3,780.00!! Wow...

    The solution? We purchased 2 brand new Galaxy Notes II GT-N7100 (factory unlocked, SIM free, international version) for a total of $1200 for both from We are signing up with T-Mobile’s $30 a month (per phone) service which includes unlimited text,100 minutes and 5GB high speed data per phone. If we go over 100 minutes, we pay 10 cents per minute.
    Total estimated cost for the next 24 months? $2950. But wait, we are getting a much better phone, that on a contract would cost $300 per unit! That would raise the AT&T 2 year contract to $4320... Instead we will be paying $1370 less!
    And there is no contract, which means we can switch to any GSM prepaid service at any time.
    Reply 7 Votes I'm for Pre-paid
    • But you are on T-Mobile.

      I once went 8 days without a cell. 8 days of travel in the lower-48 states and no cell.

      Even on contract, T-Mobile is much cheaper than AT&T for a reason. As bad as AT&T coverage is, T-Mobile is much much worse.
      Reply 2 Votes I'm Undecided
      • OK, so what?

        First, I do not travel within the US much. But if I go to an area with poor T-Mobile service for any length of time, I can but an AT&T compatible SIM card from a long list of MVNOs supporting AT&T, pop it in for the length of the trip! This is why prepaid with an unlocked phone is a great solution.
        That also works for AT&T users traveling in bad AT&T service where T-Mobile may be better.
        Reply 1 Vote I'm Undecided
        • And that greatly adds to your cost equation.

          For people that never travel, that is OK. For people that actually leave their home areas, that is very unpractical. So as long as Verizon and AT&T costs for pre-paid and on-contract are basically the same, there is no reason to go pre-paid.
          Reply 1 Vote I'm Undecided
          • Greatly add to costs?

            Actually, it doesn't. If service is not working great with the service you have, you find another one (as I did). Whether it would cost any additional money at all depends on if you are willing to wait until the end of your service period (a matter of days, since you're not under contract) or leave immediately. Any additional cost would possibly be the difference between the new plan and the one you're leaving. Even then, you're talking a few dollars.
            Reply Vote I'm Undecided