That sucking sound you're hearing right about now is the collective gasp of iPhone owners opening up their first monthly bills.
It turns out that the eye-popping retail price of $499 was just the start. Even those who got the cheapest deals -- such as existing AT&T customers who pay $40 a month for service -- found their bills spiraling well over $100 once activation fees, data plans, surcharges and taxes were added in. (See one example.)
Let me say up front that I'm not an iPhone hater. It's a really cool phone. I'm also not blind to the fact that every carrier likes to lard on fees. They're all evil that way.
What I am saying is that the iPhone experience vividly illustrates why we have to keep our wits about us when it comes to wireless service. If we want to be savvy cell-phone consumers, we have to:
- Know what we're paying for.
- Minimize paying for crap we don't need.
To that end, here are some thoughts for keeping your cell costs in line:
Shop the plan, not the phoneWith a few spectacular exceptions, like the aforementioned iPhone, most cell phones are basically commodities. If a phone has a certain configuration of features at Verizon, you can find something similar, perhaps even the same phone, at Sprint or Alltel.
Phones are usually loss leaders, anyway. The carrier makes its profit on the monthly plan you choose. So make sure you shop hard for the right plan. Sites such as MyRatePlan.com, SaveOnPhone.com and LowerMyBills.com can help you sift through the alternatives.
Service is important. Make sure you'll have coverage in your home and all other locations you'd regularly use the phone.
But you also should find out what carriers your friends and family use. At most carriers, calls to cell phones in the same network don't count against your bucket of "anytime" minutes. At Sprint Nextel or T-Mobile, you can add this in-network feature for $5 or $8, respectively. If you use the same carrier as the folks you call the most, you often can get away with a cheaper plan.
Get a better phone dealIf you plan to switch wireless companies, consider buying your phone (and the monthly plan that goes with it) from someone other than the carrier.
Why? Because wireless companies pay retailers such as RadioShack, MyRatePlan.com and others a bounty to bring them business, and many retailers pass that bounty on to consumers by discounting phones even more than the carriers do.
Retailers are "competing basically on the phone price because the plans are all the same" as what the carriers offer directly, explained Allan Keiter, the president of MyRatePlan.com.
Unfortunately, wireless companies don't pay the same bounty on existing customers, so if you plan to stay with your carrier but want a new phone, you may get the best price simply dealing directly with the carrier.
But you can still save money by buying all your phone accessories from a retailer instead of from the carrier.
Tweak your tierMost monthly phone plans these days are pretty similar: You get unlimited night and weekend minutes and a bucket of peak or anytime minutes. These come in tiers that vary somewhat by carrier, although blocks of 300, 600, 900, 1,200 and 2,000 minutes are typical.
Getting that bucket right is a bit of an art. Buy too few and you can pay a small fortune in overages -- peak minutes that cost 40 to 45 cents each. Buy too many and you're wasting money.
But there's another hitch: The typical wireless contract lasts two years. Most carriers are happy to let you switch to a more expensive plan with a bigger bucket of peak minutes without penalty, but if you want to step down to fewer minutes, you typically have to agree to extend your contract an additional year or two. (If you regularly have 200 or more unused minutes and like your carrier, though, you should consider stepping down a tier.)
Thus, it pays to be a little conservative when estimating your future use. If you're signing up for a new carrier or a new plan, monitor your minutes closely in the first two weeks to see whether you're on track. Carriers let you change plans or even terminate service in that window. The same holds true if you switch to a new carrier and discover its coverage is spotty. As long as you end the contract within the allotted two weeks, you're off the hook -- although you may face a charge if you return a phone in less-than-new condition, Keiter warned.