Prepaid Cellphones Are Cheaper. Why Aren’t They Popular?
Update: I didn't go through with switching away from AT&T. Virgin Mobile has essentially no coverage at my home or near where I usually work, in SoHo.
Brian X Chen:
The iPhone with a two-year contract on AT&T, for example, costs $200 for the handset and then upward of $90 a month for the plan; over two years, including the cost of the phone, customers pay at least $2,360. With a prepaid plan on Virgin Mobile, which is owned by Sprint, the iPhone costs $650 for the handset, and then $30 a month, including unlimited data (the type of data plan that people are happier with, according to J.D. Power). Over two years, that would cost about $1,370.
It's a tactic that has worked for decades: trick people up-front and screw them in the rear. Short-term gain, long-term pain. Etc. The carriers thrive on this.
But it's still pretty jarring to see it laid out in such simple terms: if you're willing to pay $450 more upfront, you'll save about $1,000 over the next couple years.