No-contract iPhone: Spend now, save $1,000 later

Virgin Mobile and Cricket offer much cheaper plans if you're willing to pay more for the smartphone and risk their networks

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That said, it's only fair to mention that Cricket and its parent company probably have millions of customers, and the people whose complaints I saw on the Web are obviously far fewer in number. People who are angry are much more likely to post comments than satisfied customers are.

Cricket says its service is nationwide, but when you call up its coverage maps, you need to type in your ZIP code to see if your area is covered. It's crucial you check that before you sign up.

Virgin Mobile uses Sprint's network, which is extensive but far from ubiquitous, so you'll need to check its coverage maps, too. Speaking of misleading: Just because your city is on the list of covered areas doesn't mean the entire city has coverage -- there are plenty of dead spots. If you're thinking of Virgin and know people who use Sprint, ask them come to your home or office and see what kind of reception they actually get. (That's a good idea for any carrier, by the way.)

Still, I'd say advantage Virgin Mobile on the coverage and customer service issues.

TCO: Virgin and Cricket beat AT&T, Sprint, and Verizon by $1,000
You can cancel Cricket whenever you want, while you're stuck with AT&T, Sprint, or Verizon for two years, unless you're willing to pay an outrageous termination fee. However, using Cricket pays off (meaning when the higher upfront iPhone purchase price is made back by the lower monthly payments) only if you keep the service for six months; using Virgin pays off after eight months. Neither period is very long, but long enough where if you're unhappy you may be stuck for a while unless you have cash to burn for another new iPhone.

The real advantage, though, can be seen over two years, the length of a contract with AT&T, Sprint, or Verizon. A two-year contract with AT&T (again, Sprint and Verizon charge about the same) comes to $2,839 exclusive of taxes for the 24 months of usage: $199 for the iPhone and $110 a month for data, voice, and texts. You'll pay Cricket $1,819 for that same period: $499 for your iPhone, and $55 a month for unlimited voice, data, and texts. Virgin's 24-month cost is $1,850, but you get a bit more data. That's $1,000 in savings over two years.

Given that the cost over two years is so close between Cricket and Virgin, if I were interested in a prepaid plan I'd probably go with Virgin because I believe the overall level of service is higher. Of course, when you choose either you have to be able to afford a much bigger upfront cost than you'd pay Verizon, Sprint, or AT&T -- you need the money for the iPhone when you start.

As noted, there are certainly service and coverage questions that have yet to be resolved. But I suspect that within six months there will be a lot of feedback from Cricket and Virgin iPhone customers, so we'll all be in a better position to make an informed choice.

The most important word in the previous sentence is "choice." After years of a near-monopoly, we're beginning to see significant competition in the mobile market, and that's a very good thing.

I welcome your comments, tips, and suggestions. Post them here (Add a comment) so that all our readers can share them, or reach me at bill@billsnyder.biz. Follow me on Twitter at BSnyderSF.

This article, "No-contract iPhone: Spend now, save $1,000 later," was originally published by InfoWorld.com. Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.

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