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Comparing Cellular Service Providers in 2009

Text messaging and other data services are skyrocketing, but you might be getting relief, because court rulings are pushing carriers to address the nagging issue of early termination fees. Buying cellular service can get a bit fuzzy, so we’ll try to send you a clearer signal.

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The data capabilities of today’s wonder phones can make it easy to find a restaurant, allow you to do your banking and even find out how far away your fairway shot is from the green, but shopping for one of these devices can give you sticker shock—not for the phone, but for the cost of running the darn thing. (Depending on the plan, you might pay as much as $3,600 on a 2-year contract.)

Although carriers are touting phones that are supposed to be the end-all, be-all communication device, they’re not really giving people a good enough deal to actually use them, says Nathan Andrews, an information-technology worker in Michigan. Andrews estimates that he sends 500 text messages a month, and he uses his phone to connect to the Internet. He figures that he talks no more than 150 minutes per month.

He’s not alone. According to carriers and Jeff Kagan, an independent telecom industry analyst, the use of data services—things such as text messaging, Web browsing and GPS—are expanding more than 50 percent per year. That will continue to increase, Kagan says. But plans that include unlimited texting and other data services typically cost between $65 and $80 a month from a national carrier.

Andrews says the only reason he can afford his phone habit is that he got in with Sprint Nextel less than a year ago when it was still running its Sprint Employee Referral Offer (SERO). An open secret among those who frequented online cell-service message boards, SERO bundled 500 minutes of talk time with unlimited data and texting for just $30 per month. The only qualification was having a Sprint employee’s e-mail address.

But Sprint disconnected SERO after it realized that consumers who didn’t really know employees were taking advantage of the system. (Now, Sprint requires the last four digits of an employee’s ID number.)

Calling It Like It Is—Comparing Service Plans from National Carriers

Calling It Like It Is—Comparing Service Plans from National Carriers

Granted, consumers took advantage of a loophole in Sprint’s program, but it’s difficult to feel sympathetic considering national carriers’ history of inflexible pricing and shoddy customer service. And make no mistake: Cellphone service providers now will be judged by how they deliver data services.

DATA THAT COMPUTE. Despite the high price of plans, data—and voice—deals improved over the past year, Kagan says, but there’s still room for further improvement. Before spring 2008, wireless customers were being nickel-and-dimed to death with pay-as-you-go data fees, such as per-kilobyte and per-text charges, that quickly add up on monthly bills. The uncertainty and confusion alone were reason enough for the average user to steer clear of data.

But last spring, the data market was transformed when the major carriers gave you the choice to buy “all-you-can-eat” data plans. These plans allow you to pay one fee for a “buffet” of data per month. This meant a move from charging between, say, 10 cents and 15 cents per text to selling 500 texts for $10 or unlimited texts for $20 per month on top of standard voice plans. Meanwhile, carriers increased the price of individual texts to 20 cents to push you to pick up one of their bundled packages. (If you send 100 text messages per month or more, it makes sense to buy a bundle.)

Since the shift in pricing, Kagan says, data use skyrocketed, with more than 2.5 million texts sent per day. Data make up between 10 percent and 15 percent of the cellular services market now, and he and other analysts expect to see that percentage soar. The good news? If you’re one of those who has yet to plunge into the data pool, Kagan predicts that carriers will push to make it worth your while with cheaper flat data rates and bundles this year.  

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