iPhone enthusiasts (like myself) that are holding out for the iPhone 5 but do not want to subscribe or renew their contract(s) with any of the overpriced top three carriers (AT&T, Verizon and Sprint) can now purchase an iPhone 5 from Straight Talk, a Walmart branded mobile carrier that utilizes the wireless network bands of AT&T and T-Mobile. Instead of paying for a nominal $30~ monthly data plan atop of minutes and iPhone subsidy, the Straight Talk plan at $45.00 a month gets you unlimited talk, text and data.
The caveat is that you will need to fork out for an unlocked iPhone 5 at face value:
- $649 for 16GB
- $749 for 32GB
- $849 for 64GB
Price point for the iPhone 5 purchased from Walmart/Straight Talk is essentially the same price for an unlocked iPhone 5 directly from Apple.
After being fed up with overpaying for basic wireless service with AT&T, I switched to Virgin Mobile USA.
No matter how you look at it, these prepaid/contract-free carriers are more cost effective over the long run, even though there is a hefty up front cost for the iPhone.
To illustrate this, I had a subsidized 32 GB iPhone 4 with AT&T on a 2-year contract. Cost of the phone was $299 and basic monthly voice and data plan was $85 (including taxes). So for two years, I was paying $85.00 x 24, or $2,040.00 in wireless phone bill alone. Add the subsidized iPhone 4 into the mix and the total cost jumps to $2,339.00. I did not have any extravagant plan, just the bare bone minimum (400 minutes of voice and never used any of my rollover minutes) with an 8% discount applied to my monthly plan.
I switched to Virgin Mobile USA and held out on an LG Optimus Elite running the Android OS for two months (I felt like I took 10 steps backward), hoping Virgin Mobile would announce the availability of the iPhone 5 on their network. Patience ran out and I went out and purchased a 16GB iPhone 4S at an upfront cost of $488.00 (sales tax included). My monthly bill for Virgin Mobile went from $38 with the Android phone ($35.00 + taxes) to a flat $30 (this is due to Virgin Mobile USA’s promotion for subscribers with the iPhone handset). $30 a month gives me 300 minutes (more than I need, but for $10 more, I can have unlimited talk) and unlimited text and data. If I were to hold onto the iPhone 4S for 2 years, my cost of ownership would be $720 in mobile phone bill plus $488 for the iPhone 4S, totaling $1,208 – a savings of $1,131 (more than enough for a Prius PLUS ground effects kit by TRD). Comparing the savings from just voice and data plans alone, I am saving $1,320 over 24 months, which translates to $660 a year, which is just enough to pay for a 6-month insurance premium for both our 2012 Toyota Prius Four and 2012 Toyota Prius C Four.
Even if I were to purchase an unlocked iPhone 5 at face value up front and go with a pricier Straight Talk plan (pricier relative to Virgin Mobile USA), the total savings over a two year span equates to $511, regardless of the iPhone 5 model.
What can a savings of $511 ~ $1,131 yield me? Well, many things. More cash for road trips and vacation, more cash to wine and dine, more cash for the nest egg / rainy day fund, more cash for home improvement projects and even more parts / accessories for the Prius.
The lower monthly rate, the flexibility to switch phones without getting hit with a hefty ETF (early termination fee) and the overall long-term lower total cost of ownership made the switch a sound decision. As far as reception goes, I have full coverage on my Virgin Mobile USA plan throughout various trips I’ve taken in 2012, including the Central Coast of California up to Monterey county, a stop over in Minneapolis, MN to Philadelphia, PA, Maryland, Delaware, New Jersey and even Washington D.C. As a matter of fact, I was able to get 3-bar reception on my Virgin Mobile USA plan in parts of Maryland that my girlfriend’s AT&T iPhone 4S couldn’t.
Of course these contract-free plans have certain limitation. For example, the Virgin Mobile USA iPhone 4S cannot be used oversea – even though it has a sim card slot, the device is locked to USA territories only. Availability of 4G speed or LTE is limited; for me these trade-offs do not pose a problem. But I can see that it may cause inconvenience for frequent travelers and business users. “Unlimited data” usually means throttled downstream speed once 2GB is surpassed, just like the big three, and certainly true for Virgin Mobile USA and Straight Talk.
Of course if you’re not an iPhone fan, you can still take advantage of the low rates from Virgin Mobile USA or Straight Talk. As for me, I’ll wait for Virgin Mobile USA to announce the iPhone 5S, which is probably scheduled for release this summer.