# Prepaid Cellphones Are Cheaper. Why Aren’t They Popular?



## mrcheap

Courtesy of the NY Times blog:

http://bits.blogs.nytimes.com/2012/08/02/prepaid-phone-plans/


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## ddkay

This doesn't really apply to Canada, first and foremost because Canada uses 3Y contracts instead of 2Y. BellRobsUs will not sell you an iPhone on a plan for any less than $50/month. They will eat $490 of hw cost if you stay for 3 years, so take $13.61/mo away for 36 months. What prepaid plan features can you match 1:1 for $36.39? None that I know of... Even if you bring it to a flanker brand like Koodoo, an unlimited local/500MB LTE plan costs $55/month. Add in the cost of the phone you purchased again and that's over $70/month. Even if you bought the cheapest and crappiest phone, you can't win.

If you go to Wind, it still makes more sense to use the tab/contract. Off contract customers are paying the same plan price as everyone else and not getting any hardware discount. Unless you are not staying in the country very long why would you go off contract? It's a lose lose situation for prepaid cell phone users in Canada, you are actually the most profitable.


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## Spudd

I disagree ddkay. It depends on your usage. I looked at the cost of buying an iphone outright vs buying one through Rogers/etc and my analysis showed that it was cheaper to buy the phone outright and use pay-as-you-go. I'm on a $10/month pay-go plan (all-in cost is $11 with tax) and I use the phone as much as I want, and that includes voicemail and call display. Granted, "as much as I want" is not very much - I probably send 30 texts per month, call for maybe 10 minutes/month, and use 1-3 days worth of data.


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## GOB

For most people who use a couple hundred minutes of voice and frequent data usage for a smartphone pay as you go is not really an option and there is very little to no advantage to buying the phone outright. The plans are same whether or not you get the subsidized phone. 

Though it is rather expensive, I don't feel it's a terrible deal considering how much I use my iPhone. Pre-smartphone plans were far worse for what they offered. $60/month all in for as much voice as I use, unlimited text and data isn't a terrible deal.


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## brad

It really does depend on how much you use your phone. I make or receive 2-3 calls per month on my cell (a few more when traveling), so even with my current $25/month contract I'm paying at least $10 per call. That sucks. But prepaid generally doesn't work for me because carriers either don't offer international roaming for prepaid or you can't get the roaming packages that offer a better rate. I have a smartphone but refuse to pay for a data plan (given my limited data needs); if I need to check my email when traveling I use WiFi. Even if I have to pay for WiFi on those occasions it works out to much less than if I had a data plan.

It all depends on how often you use your phone and whether you can get by without data, GPS, etc.


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## ddkay

rephrase, for most people that actually want to use their cell phone.... 10 minutes/month users are not in that category. Why not just ask to borrow a phone from the person next to you to make a quick call or text? Most people are good people and wouldn't mind.

You are also reliant on a landline of some sort, whereas somebody with a good plan could cut that out completely.


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## andrewf

I think it's reasonable for people to pay $10 to have access to a cell phone. Relying on strangers for cell phone access seems unsustainable, and no one can contact you directly.


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## ddkay

andrewf said:


> And no one can contact you directly.


but if it's a burden to contact you people wont bother anyway! Spill the beans in 10 seconds or I'm hanging up you're taking my minutes!! lol

As a real world example, Winds $15 pay-your-way plan comes with unlimited incoming and 25c/min outgoing, 15c/text and no subsidy for a smartphone. OR, for $25 you can get unlimited local calling both ways, unlimited nation-wide texting, 100mb data AND $200 towards a new smartphone. Yea you're tied up for 3 years to keep the sub, but counting the cost of the sub, isn't being able to use your phone the way it was designed to be used worth an extra 5 bucks/mo? or an extra 10 if you want unlimited data with the current promo running now.

Anyway my original point was there are many more and better prepaid options in the US than Canada, we're comparing apples and oranges. In the US you can find a prepaid plans 100x better because the carriers are trying to relieve pressure from shorter duration 2 year service contracts. Also the best prepaid plans aren't from AT&T.. they are on smaller regional or urban focused providers like T-Mobile, MetroPCS.. the size of the market/coverage area always matters too.


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## Spudd

I totally agree the US has better cellphone plans than we do! And I agree if you're a heavy user, you're probably better off on a monthly plan. I use my iphone a LOT, but mostly on wifi. I think we've had this argument before.


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## Jim9guitars

mrcheap said:


> Courtesy of the NY Times blog:
> 
> http://bits.blogs.nytimes.com/2012/08/02/prepaid-phone-plans/


Uh, why quote the NY Times on a Canadian Money Forum anyway? Just sayin'.


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## Sherlock

I don't see why people feel the need to own $700 phones. I bought a $150 android smartphone and it runs everything I've installed from the google play store. Angry Birds Space runs smoothly. It's more powerful than the best phones of only 3 years ago, and in another 3 years you will be able to buy a low-end phone for $150 that will be more powerful than the best phones of today. If only well-off people bought $700 phones and bought them outright, we wouldn't have these ridiculous 3 year contracts, but the telecoms have managed to convince the masses that everyone needs a high end phone. I wouldn't even buy a car on a 3 year contract.


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## GOB

Sherlock said:


> I don't see why people feel the need to own $700 phones. I bought a $150 android smartphone and it runs everything I've installed from the google play store. Angry Birds Space runs smoothly. It's more powerful than the best phones of only 3 years ago, and in another 3 years you will be able to buy a low-end phone for $150 that will be more powerful than the best phones of today. If only well-off people bought $700 phones and bought them outright, we wouldn't have these ridiculous 3 year contracts, but the telecoms have managed to convince the masses that everyone needs a high end phone. I wouldn't even buy a car on a 3 year contract.


To each their own. There are plenty of things I do on my phone that wouldn't function nearly as well on a cheaper/older phone, such as trading and remote desktop access. Everyone values things differently. I think it's stupid to buy a $100 shirt or pair of jeans but it's ok to buy a $700 smartphone that adds a huge amount of productivity to my life, in addition to enjoyment. Others may feel the need to be stylish and buy fancy clothes but only have the need for a cheap phone. The problem is not with individual things - the problem is the mentality of some people where they simply have no idea how to save money and live paycheque to paycheque regardless of how much they make. 

Considering what you can do on a phone these days, I think it's fair value when looked at in a vacuum. Only when you compare voice and data rates and contracts in other countries does it seem ridiculous. 

The ability to talk, trade, e-mail, and access the internet and hundreds of thousands of apps is worth well over the $60/month that I pay, in addition to a new phone every couple of years. This is especially true if you get rid of your landline which typically costs at least $20/month.


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## m3s

Sherlock said:


> I wouldn't even buy a car on a 3 year contract.


Yet more of the masses buy brand new cars on 5 year 0.0% "free" financing that is the exact same ploy; getting more people to spend more money. Whether or not the extra cost is justified highly depends on the individual..... $150 android phone is probably a better value in the same way that nothing expensive is a good value if you don't appreciate/need the extra quality. They replace many expensive portable devices and for someone who travels or uses it for productivity you can easily justify the cost. $150 Android phone is not supported after a year or two and worthless by that time, whereas more expensive phones are supported for years and have a resale as well, but it's all just as irrelevant. 

Prepaid plans are a pretty good deal in Canada for all the young people who scarcely use voice or text anymore (can all be done on data..) especially if they bought an unlocked phone online for much less. In Europe if you take a "subsidized" phone plan the extra monthly cost is transparent in the plan. In Canada, everyone pays for subsidized phones collectively in some kind of huge price fixing scam you can't avoid. If you "bring your own device" in any other country besides US/Canada, you pay half the cost. In most countries, I can grab a prepaid sim in the airport for $20 that lasts me a month or two whereas in Canada the sim alone will cost you $25 activation.. In other news my Cdn telcos stocks are leading my gains


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## praire_guy

ddkay said:


> This doesn't really apply to Canada, first and foremost because Canada uses 3Y contracts instead of 2Y. BellRobsUs will not sell you an iPhone on a plan for any less than $50/month. They will eat $490 of hw cost if you stay for 3 years, so take $13.61/mo away for 36 months. What prepaid plan features can you match 1:1 for $36.39? None that I know of... Even if you bring it to a flanker brand like Koodoo, an unlimited local/500MB LTE plan costs $55/month. Add in the cost of the phone you purchased again and that's over $70/month. Even if you bought the cheapest and crappiest phone, you can't win.
> 
> If you go to Wind, it still makes more sense to use the tab/contract. Off contract customers are paying the same plan price as everyone else and not getting any hardware discount. Unless you are not staying in the country very long why would you go off contract? It's a lose lose situation for prepaid cell phone users in Canada, you are actually the most profitable.


Actually the cell companies eat no cost what so ever. I pay 13 a month towards my phone, in addition to the 279 I initially paid. This works out to 750 bucks, exactly the cost of an iPhone. 

What sucks though is after the contract my bill doesn't go down 13 a month. Weird. I am interested on how you can go pay as you go on an iPhone?


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## Spudd

You buy the iPhone up front (I got mine from markways.com). Then you just get the SIM for Pay-as-you-go from Rogers or whoever, and bob's your uncle. If data is your concern, I'm not sure if you can get always-on data with pay as you go. But at least with Rogers, you can buy either 1 or 7 day data passes that give you a certain amount of MB, once you use up either your time or your MB you have to buy more. I have wifi at home and work, though, so I rarely need to use the data.


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## MrMatt

Sherlock said:


> I don't see why people feel the need to own $700 phones. I bought a $150 android smartphone and it runs everything I've installed from the google play store. Angry Birds Space runs smoothly. It's more powerful than the best phones of only 3 years ago, and in another 3 years you will be able to buy a low-end phone for $150 that will be more powerful than the best phones of today. If only well-off people bought $700 phones and bought them outright, we wouldn't have these ridiculous 3 year contracts, but the telecoms have managed to convince the masses that everyone needs a high end phone. I wouldn't even buy a car on a 3 year contract.


Well, since my usage pretty much requires a contract, the $700 phone drops to only $100-200. If I went with a $500 phone, it's $0 out of pocket.
What if the features I wanted aren't available on the older phone? 8mpixel camera, voice control, extra large HD screen?

Why order steak, when ground beef is nutritionally the same? or a fresh apple rather than slurping sauce?
Sometimes we pay a bit more just for the different experience.

Finally buying a new 3 year old phone every year or two is more expensive than simply buying a new phone once.


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## andrewf

Matt, I hate to tell you, but your shiny new phone will be two years behind the curve in two years. Why would you be replacing a two year old phone every year? Are you saying iPhone 3 is rubbish and only good for a year?


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## MrMatt

andrewf said:


> Matt, I hate to tell you, but your shiny new phone will be two years behind the curve in two years. Why would you be replacing a two year old phone every year? Are you saying iPhone 3 is rubbish and only good for a year?


The iPhone 3 is a piece of overpriced rubbish, but that aside I was explaining why some people want top end phones. Oh and you don't hate to tell me that my phone will be 2 years behind the curve in two years, you're trying to throw it in my face, guess what, in 2 years it will be 3 years from the hottest thing on the block. That doesn't change the fact that at the time I bought it, it was the right phone for me.

I bought an expensive phone for the above reasons, and since I'm on a contract, the actual price I paid (above the contract) is less than a dollar a week. For the extra features it's worth it to me. Let me compare it to your iPhone 3.
I have voice control & speech recognition, more storage plus an external SD card, bigger screen, bigger on screen keyboard, brighter screen, higher resolution screen, replaceable battery, better camera, free navigation software, lighter, faster processor and faster data network.

Since those matter to me, I'll pay a few cents a day for them.


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## andrewf

That's your prerogative. I was making the point that a phone that is 18 months or 2 years old is far from useless, and could be a good choice for many if not most consumers.


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