Sunday, January 29, 2012

Getting out from beneath the cell phone giants

My wife and I are currently paying $135.45 (before taxes) for our cell phones which gives us 700 shared minutes and two unlimited data plans. In an effort to save money we are biting the bullet and considering alternatives to bring this perpetual cost down.

Spoiler: We are going to switch to a $2/day prepaid plan with no contract. We are going to use google voice for most of our phone calls for free and will buy an adapter ($50) so that we can use a regular phone to make Google Voice phone calls from our house. We can then adjust our usage to effectively pay $0 / month for our cell phones instead of being locked into $135 month after month. 

Our requirements are:

  • one data plan for GPS navigation and web browsing – we decided we could share the phone with the data plan when needed
  • great cell coverage for emergency phone calls
  • ~500 text messages / month
  • ~700 minutes / month

Coverage for emergencies is a high priority, so this limited us to Verizon and ATT. This was based on looking at coverage maps and asking around.

Now that we are down to two companies – it is time to think about the plan.

My first thought was that if we joined forces with another family then a family plan might be worth it… I built an excel spreadsheet and found two things

1) Unlimited plans would be more expensive than we are paying now

2) 2000 minute plans would only be slightly cheaper than we are paying now

(note that this is based on 2 lines with 2 data plans per family)


This was unacceptable when factoring in the drama that comes from working with another family (fighting over minutes, handling money, etc.) so we moved on to prepaid…

We learned that prepaid with Verizon was not an option. They charge you $10-20 for texting, plus the voice part, plus the data part. ATT prices were close to the same as Verizon but included text messages making Verizon about $10-20 more expensive.

So onto ATT prepaid. Lets first talk about data. Data options are


Which means nothing if you don’t know how much you use – so off to Verizon to see how much we use…


Ouch – line 5961 (me) is using a lot – this pre-paid thing (as far as data goes) might not work out. Line 6447 could get by with the $25 plan which is $5 cheaper than currently paying Verizon. I called ATT and asked what would happen if I went over the 500MB.

“If you have money in your account, and your account configured to allow you to go over – then you will buy another 500MB.”

This is good news in the sense that I can use more than 500MB but means I would need 3 subscriptions per month totaling $75. Not so good.

But – this is all a mute point because I am not using that much anymore. At my last job we were not allowed to stream radio – so I was using Pandora through my phone. At my new job I can stream through my computer – so what is my usage like now…


So this usage extended out to a 30 day month, is ~260MB. Much better!

So data is $25. And the best part is… because I am not under contract (by going prepaid) I can turn the data on and off at will. I confirmed this by calling ATT and they do not require data with a droid on a pre-paid plan. Worth noting that iPhone has some special data requirements and isn’t eligible – but this didn’t effect me so I didn’t spend any time to figure out what that meant. 

Now to the voice and messaging of pre-paid.

The basic plan is


this provides a benchmark for comparing to the other plans. The pay by minute plan looks like this


With text messaging unlimited, but only 250 voice minutes included – the question becomes how many minutes would I have to use – to be better off with the unlimited plan – in other words - what is my breakeven point. A few calculations later and we arrive at 500 minutes. This is not looking like a good fit for us.

So how about the pay by day plan.


This plan also has unlimited texting  so the question is how many days would I have to use my phone to be better off with the unlimited plan. At $2 / day – it is simply 25 days.

It is worth taking a pause here to explain the pay by day. If you use your phone to send or receive a call, or send a text message, that is a $2/day charge. Yes, receiving texts are free. Once you you pay for  a day, you have unlimited calls and texts.

Back to the analysis – if we can keep it under 25 days – than we would be better off with the pay per day.

So for the final analysis we need to compare the prepaid to our contract plan. Our current Verizon bill $135 – we have already decided to remove one data plan at $30 so we arrive at $105. Prepaid monthly would be $50 per phone + $25 for one data plan. Totaling $125… but what about pay per day.

The breakeven point for pay per day with one data plan at $25 and 2 phones paying $2 / day is 20 days per phone.

Our conclusion:

We are committed to bringing down our cell bill and the prepaid gives us the greatest flexibility to do that. We like that if we are trying to save money we can easily cancel data temporarily and limit our phone usage to potentially emergency only. We would gain the option to not use our phone for a single call or text and effectively pay $0 on any given month. And during that entire month we would still have coverage and the capability to make an emergency call.

Heavy usage months would cost us $125 which is more than contract $105. But we plan on having enough savings throughout the year to offset these heavy months.

To help facilitate limited cell phone usage we are setting up google voice accounts for each of us. We will be able to make calls from a house phone using google voice (going through the internet) mitigating some of our cellular needs.  Note that Google Voice is currently free. We will not give out our cell numbers and instead give out our google voice number. We will configure Google Voice to forward to the house phone, our computers, and our cell phones. If we are unable to answer on the computer or the house phone then we can choose to answer with the cell phone.

Angela won’t have a data plan but will be able to connect her Droid over our wireless network. She will still be able to use all of her apps (like facebook) but just not while out on the road.

We will limit calls while driving and instead make those calls from home.

We ordered an Obi phone adapter so that we can connect a regular phone to our google voice account.


  1. I love your research, its so you.

  2. Hey it is really hard to use cell phones now, as the call rates and data plans are so costly.

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