Cheap iPhone Plans

Despite the difficult economic times, people are spending more and more on their mobile phones. A full 90% of U.S. adults own a cell phone, and 63% of adults go online wirelessly using their mobile phones or other devices. Almost half (46%) of people with a mobile phone spend $100 or more per month, and more than one in ten (13%) spend more than $200 per month.

One of the principal drivers of the trend towards higher mobile phone bills is the popular iPhone. Luckily, the cost of using an iPhone can be lowered using a prepaid plan from Virgin Mobile or Cricket.

Virgin Mobile offers three prepaid iPhone plans with differing numbers of anytime voice minutes. The least expensive plan costs only $35 per month, with a $5 discount for customers who sign up for automatic monthly payments. For this net of $30 per month, customers get unlimited data and text messaging, and 300 anytime voice minutes. While the data is unlimited, Virgin Mobile reserves the right to slow down the data connection after the first 2.5 GB. For customers who talk more, an extra $10 per month buys an added 900 anytime voice minutes per month (for a total of 1200 anytime voice minutes), and an extra $20 per month buys unlimited anytime minutes. There is no activation fee.

There are three drawbacks to Virgin Mobile’s prepaid iPhone plans. The first is the previously mentioned threshold of 2.5 GB of full-speed data. This will be enough for most cell phone users. For example, this amount of data would allow a user to perform the following activities each month with 500 MB to spare: 1000 emails; 500 downloaded web pages; 15 hours streaming audio; 6 hours streaming video; 10 hours online gaming; and uploading or downloading 200 JPEG photos. However, consumers who frequently use their iPhones for audio or video downloads would become frustrated.

The second drawback to Virgin Mobile’s prepaid plans is that the customer must have the financial resources to pay for the iPhone upfront. The iPhone 4S with 16 GB memory costs $649.99, while the cost of the iPhone 4 with 8 GB memory is $549.99. Unlike the contract plans available from AT&T and Verizon, Virgin Mobile customers cannot spread this cost over a two-year service contract.

The third drawback is that Virgin Mobile is not yet selling the iPhone 5. Thus, consumers who simply must have the latest iPhone model cannot use the Virgin Mobile prepaid iPhone plans.

Despite these drawbacks, Virgin Mobile’s prepaid iPhone plans are attractive because they are less expensive than competing plans. If a consumer buys an iPhone 4S with 16 GB memory, plus the mid-tier plan with 1200 voice minutes, the total cost over two years would be $1609.99 ($649.99 for the iPhone + $40 per month * 24 months + $0 activation). The consumer would also avoid being locked into a multi-year service contract. For the majority of consumers, the mid-tier service plan will meet their needs and they will not reach the threshold of 2.5 GB of full-speed data.

Virgin Mobile’s main competition for prepaid iPhone plans comes from Cricket. Cricket is currently selling the iPhone 4S with 16 GB memory for $499.99, which is $150.00 less than Virgin Mobile’s price. Cricket’s price for the iPhone 4 with 8 GB memory is $399.99, which is also $150.00 less than Virgin Mobile’s price for that phone. As with Virgin Mobile, Cricket does not charge an activation fee.

However, Cricket’s prepaid iPhone plan is more expensive than Virgin Mobile’s plans. For $55 per month, customers get unlimited voice, messaging and data. As with Virgin Mobile, the full-speed data connection threshold is 2.5 GB. Over two years, a customer purchasing an iPhone 4S with 16 MB memory would spend $1819.99 ($499.99 for the phone + $55 per month * 24 months + $0 activation). This is $210 more than the customer would have paid to Virgin Mobile for its 1200 voice minutes plan.

Whether iPhone users are better off with Virgin Mobile or Cricket depends on how much they talk on their iPhones. The majority of users who talk less than 1200 minutes per month will be better off with Virgin Mobile because they will save $210 over two years ($1609.99 with Virgin Mobile vs. $1819.99 with Cricket). However, the fewer users who talk more than 1200 minutes per month will be better off with Cricket because they will save $30 over two years ($1819.99 with Cricket vs. $1849.99 with Virgin Mobile). This is because these consumers would need Virgin Mobile’s unlimited voice plan, which would have a two-year cost of $1849.99 ($649.99 for the phone + $50 per month * 24 months + $0 activation).

Regardless of whether consumers purchase their iPhones from Virgin Mobile or Cricket, they will save money compared to purchasing their iPhone along with a multi-year contract from AT&T or Verizon.

AT&T and Verizon are currently selling the iPhone 4S with 16 MB memory for $99.99, but purchasers must also buy a two-year service plan. A typical plan includes monthly fees of $39.99 for 450 minutes of voice, $20 for texting, $30 for 3 GB data, and a one-time activation fee of about $35. The total two-year cost is $2294.75, which is about $684 more than the Virgin Mobile plan with 1200 minutes of voice. Purchasers are also locked into the two-year contract—which is a very long time in the cell phone world.

AT&T and Verizon offer a number of different cell phone plans, including “share” plans where multiple users operating multiple devices can share data. Sorting through the details and costs of these plans is time-consuming and frustrating. The bottom line, however, is not in doubt: the total two-year costs are more than the prepaid plans from Virgin Mobile and Cricket, and the consumers are stuck for two years.

Some people may be tempted to purchase an iPhone from one company and buy their service from another. For example, some may be tempted to buy an iPhone 4S with 16 MB memory from Cricket for $499.99 and then use it with one of Virgin Mobiles’ prepaid iPhone plans. That way, they’d save $150.00 on the price of the phone while also benefitting from Virgin Mobile’s lower-cost plans.

Alas, each iPhone service provider locks the iPhones they sell into their own cell phone network. Even if the iPhone is unlocked (which, for example, is commonly done when users travel to Europe), the phone cannot be reconfigured to work on a competing U.S. cell phone network. Thus, consumers cannot generally buy their iPhone from one company and their cell phone service from another.