Cell Phone Plans: Alternatives to Two Year Contract

The two-year contract.

To the cellphone carriers, it is the centerpiece of their business model,

promising a steady stream of revenue by handcuffing customers to their phones.

On the other side of the contract is the consumer,

locked to a phone or a carrier as competitors offer less expensive or better alternatives.

If the customers do not like the phone or the carrier, they can always walk away from a contract

The two-year contract.

To the cellphone carriers, it is the centerpiece of their business model,

promising a steady stream of revenue by handcuffing customers to their phones.

On the other side of the contract is the consumer,

locked to a phone or a carrier as competitors offer less expensive or better alternatives.

If the customers do not like the phone or the carrier, they can always walk away from a contract

by paying an early-termination fee, but in some cases those are more than $300.

Outside the world of cellphone contracts, alternatives are on the rise.

No-contract plans are available on a broad variety of phones, from basic flip phones to smartphones.

The plans are free of credit checks and can save you money if you are willing to slog through the details (and there are many).

The number of people using them has grown, and providers are competing to attract new subscribers.

The result: a torrent of plans and features.

Cellphone companies offer three kinds of no-contract plans.

Month-to-month plan holders are billed monthly, just as in a contract plan, but they can walk away at the end of a month without penalty.

In pay-as-you-go or prepaid plans, you make payments in advance and you replenish your account by topping off as needed, which is why it is also sometimes called the gas tank plan.

In monthly unlimited plans, you prepay a flat monthly amount.

Details, Details, Details

Delve into the details to make the most of no-contract plans.

First, as with any phone plan, verify network coverage in areas you live, work and travel.

Coverage among providers varies, as do roaming policies.

Also important is phone selection.

Choose a phone with features you need and enjoy.

If saving money is the main goal, resist the dazzling phone.

Phones for prepaid plans are available from makers like Kyocera, Samsung, Nokia, LG, Sanyo and Motorola.

Typical features include cameras, full (but tiny) keyboards, Bluetooth and GPS.

Models often cost from $20 to $50, and some are sold at stores like Best Buy, Wal-Mart and Target.

On the upper end, Boost Mobile (boostmobile.com) recently began offering an Android phone, the Motorola i1 ($399.99 at Best Buy).

Also important is finding a data plan that matches the phone’s features and your needs.

Some plans have unlimited data, while others have caps with additional charges for going over.

Still others are pay-per-day or pay-per-message for e-mail.

Review features that are easy to overlook.

For example, 411 calls are free on Boost Mobile’s $50 unlimited monthly plan, but they cost $1.29 a call plus air time on its Pay As You Go plan.

Big Phone Selection

If you are looking for a large selection of phones, a good place to start is T-Mobile (tmobile.com).

The company offers month-to-month plans on every phone it offers with a contract, including its latest smartphones.

Prices for the plans, called Even More Plus, are lower compared to contract plans with the same features.

For example, a 500-minute talk plan with unlimited Web access and text messaging is $59.99 a month.

That is $20 a month less than with a contract.

To qualify for the plans, you must pay full retail price for the phone (with a contract, the carriers partly subsidize the phone’s cost).

Using the 500-minute plan as an example, on a phone that costs $100 more than the contract price,

you recoup that extra cost in five months and then start saving.

The company offers a way to pay that price difference in installments on your monthly bill.

Also an option: you can use a phone purchased elsewhere as long as it meets T-Mobile’s compatibility requirements.

Lots of Talk

If your goal is unlimited talk, you can find many low-cost options.

Unlimited plans are available from AT&T (att.com),Virgin Mobile (virginmobileusa.com), MetroPCS (metropcs.com), Verizon (verizonwireless.com), T-Mobile and others.

In many cases, the costs are lower than what is available with a contract.

For example, Straight Talk (straighttalk.com) offers unlimited talk, text messaging and Web access for $45 a month.

Boost Mobile offers unlimited talk, text and Web for $50.

Compare those to T-Mobile’s Even More plan with a two-year contract and unlimited talk and text for $69.99 a month.

From Cricket Wireless (mycricket.com), a basic unlimited plan for $35 a month includes unlimited talk and text messaging,

though not other features like data, call waiting, three-way calling and 411 calls.

The Cricket plan has national coverage but is not sold in all areas.

More plans with hefty talk time are available, for example, 1,200 minutes of talk from Page Plus (pagepluscellular.com)

with 1,200 text messages and 50 megabytes of data each month for $29.95.

Sliding down to a midrange plan, Virgin Mobile, through its Beyond Talk plans, offers 300 minutes of talk and unlimited data for $25 a month.

Light Use

If you are a light user, the pay-as-you-go model has advantages over contracts.

For example, in Page Plus’s Standard Plan, a refill of $25 gets you 416 minutes of talk at a rate of 6 cents a minute,

and you have 120 days to use them before they expire.

If you have been averaging, say, 100 minutes of talk a month, you could get by on this plan by paying $25 once every four months for a total of $75 in a year.

But not all pay-as-you-go plans are the same.

Virgin Mobile’s new PayLo plan offers a refill of $20 that gets 400 minutes of talk, a lower rate of 5 cents a minute.

But if you are averaging 100 minutes a month, it is not a good fit because the minutes expire in a month.

Ask if unused minutes are rolled forward.

In another type of prepaid plan, available from AT&T, Verizon and Cricket,

your account is charged a flat fee but only on days you use the phone.

In Cricket’s Paygo More plan, unlimited talk and text messaging is $2 each day you use the phone.

AT&T, through its GoPhone Pay As You Go plans, offers unlimited calling for $3 a day.

Other providers offering pay-as-you-go plans include Common Cents Mobile (commoncentsmobile.com), Net10 (net10.com) and Boost Mobile.

Mobile Broadband

You can also buy devices that deliver high-speed Internet access to a laptop or an iPad without a contract.

You pay for service when it is needed.

Virgin Mobile offers the Ovation MC760 ($79.99), a U.S.B. modem that plugs into laptops, and the Novatel MiFi 2200 ($149.99), a portable Wi-Fi hot spot.

The plan, called Broadband2Go, has tiered pricing starting at $10 for 100 megabytes of data for 10 days to $60 for 5 gigabytes for 30 days.

Cricket and Verizon also offer mobile broadband options.

Finding a plan that lets you come and go may be a little more work than signing a contract.

Certainly the no-contract market has developed its own jargon, which one has to learn.

But there are three words you won’t find in the fine print: early termination fee.