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A wave of new offers from cell phone carriers has consumers wondering how to find the best deal. Last year, T-Mobile “uncoupled” the phone from the data plan and let people buy each one separately. AT&T followed suit, while the other competitors developed new variations of their own. Tech Tuesday explores how phone technology, business decisions and a maturing mobile communication industry are changing the landscape for customers.
- Rob Pegoraro Freelance Journalist, USA Today tech columnist and Yahoo Tech writer
- Andrew Sherrard Senior Vice President of Marketing, T-Mobile
- Marguerite Reardon Senior Writer and Author of the "Ask Maggie" column, CNET
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world on "Tech Tuesday." Last March, T-Mobile shook up the wireless communication industry with a new plan called "Simple Choice." The company took the bold step of unbundling the phone and the service plan and dumping the two year contract. Still, most customers would say choosing a phone and a plan are confusing.
MR. KOJO NNAMDIIt's often hard to sort out what you're paying for and whether there's a better deal out there. But, as the wireless market matures, consumers do seem to be getting more choices. AT&T also offers a lower price data plan if you bring your own phone while Verizon and Sprint both have new options too. And as the pace of change slows in smart phone technology, some experts say holding onto your phone for longer than two years is both practical and liberating, because it gives you more freedom to change carriers.
MR. KOJO NNAMDIJoining me for a "Tech Tuesday" conversation about changes and choices among wireless phone plans is Rob Pegoraro. He's a freelance technology journalist who writes a weekly column for USA Today and writes about policy at Yahoo Tech. Rob, good to see you again.
MR. ROB PEGORAROIt's good to be back.
NNAMDIJoining us from NPR's Bryant Park Studios in New York is Maggie Reardon, Senior Writer and author of the "Ask Maggie" column at CNET. Maggie Reardon, thank you for joining us.
MS. MARGUERITE REARDONThanks for having me.
NNAMDIYou, too, can join this conversation if you've got questions or comments. Give us a call at 800-433-8850. Do you have T-Mobile's "Simple Choice" plan? Did you buy your own phone separately? 800-433-8850. You can shoot us an email to firstname.lastname@example.org or send us a tweet @kojoshow using the #TechTuesday. Maggie, one year ago this month, T-Mobile pioneered a new type of plan that lets customers buy their phone and data plan separately and does not require a long term contract.
NNAMDIWhat makes this "Simple Choice" plan groundbreaking?
REARDONWell, what's different about it is, you know, in traditional plans, people end up paying -- you get a phone for, let's say, 200 dollars. It's really a 600 dollar phone, but the phone company is gonna subsidize it for 400 dollars. So, over the course of your two year contract, bundled into the price of your service is the cost of the phone. But, at the end of your two year contract, let's say you keep that phone and you continue paying your monthly service, you're still paying the same fee.
REARDONAnd so what T-Mobile, which is really very good for consumers is once you've paid off that phone, or let's say you're using a hand me down phone from another member of your family, you don't have to pay for that price bundled into your service. If you want to finance the phone over two years, you can do that, but if you already own your phone or you're gonna get one from a friend or a family member, you get a cheaper price on your monthly bill.
NNAMDIJoining us by phone, from Belleview, Washington is Andrew Sherrard, Senior Vice President of Marketing with T-Mobile. Andrew Sherrard, thank you for joining us.
MR. ANDREW SHERRARDReally glad to be here. Thanks for having me.
NNAMDIAndrew, you were involved in that decision to rebrand T-Mobile as the "un-carrier." What are you trying to suggest with that name, and how does it reflect consumers attitudes about the wireless industry?
SHERRARDWell, really, what we're trying to suggest by the name is that we're different than traditional carriers and we wanted to take a position of consumer advocacy of being able to let people decide what they want and how they want to do things for wireless. And really, building on the last answer, it's being fair and transparent and simple in our approach to the category, which we think is the opposite of what traditional carriers have done so far.
NNAMDIRob Pegoraro, what are the advantages and disadvantages of paying for the phone separately from the service plan? Americans are used to getting a brand new phone for what we perceive to be 200 dollars just about every two years.
PEGORAROIt's the perception, isn't it? The biggest advantage is you can actually choose the phone, instead of your carrier choosing it for you. And you can save some real money that way. This is sort of a relatively recent development. But, smart phones don't have to all cost 650 dollars, which is the actual list price for an iPhone. You can get some very good Android phones, like the Nexus 5, the Nexus 4 that I own. That's 300 bucks or less, depending on what kind of sale there is. The Moto G, you can buy unlocked for under 200 dollars. And this way, you're buying a phone that hasn't been loaded up with software you don't want by the carrier that you can't uninstall.
PEGORAROIt arrives unlocked, so if you go to another country, you can buy a prepaid sim card, pop it in, have a local phone number and not pay any roaming charges at all.
NNAMDISomething that I have done, myself, as a matter of fact. Maggie, a few months ago, AT&T began offering a no contract option. And Verizon offers something similar, but less flexible or inexpensive. How has the competition reacted to T-Mobile's innovation? Will all the carriers eventually phase out mandatory contracts?
REARDONWell, you know, it's really interesting, because, you know, it's hard to get AT&T and Verizon to respond to anybody other than each other in the competitive market, because they control about two thirds of the market. You know, most people in America are an AT&T or Verizon customer. So, for them to respond at all -- it was just really incredible and what AT&T has done is very similar to T-Mobile. They de-coupled the cost of the phone from your service plan.
REARDONSo, you can save about 15 dollars a month, if you already have your phone, or like I said, if you get it from a friend or family. So, that's really good. Verizon, not so flexible. It's interesting, because AT&T's CEO, Randall Stephenson, has already said, you know, he doesn't think that the subsidy model is sustainable, because it costs them a lot of money up front to subsidize all these devices. And then people want to get a new one, many times before their contract is up.
REARDONAnd so, it's expensive for them. But then on the flipside, you have Verizon, its CFO just recently said, well, actually, we think the subsidy model is the way to go. We're probably going to keep that. So, you know, Verizon's in a little bit of a different category than some of these other carriers. It has a more extensive network. It's perceived as being much more reliable, and so they feel that they can charge a premium and they can pretty much dictate the terms to the consumer.
NNAMDIRob Pegoraro, that means the answer to the question, will all the carriers eventually phase out mandatory contracts is no/maybe.
PEGORAROYeah, maybe not so much. Another key factor is the different technologies that these carriers use. T-Mobile and AT&T use a system called GSM, which is basically what most of the rest of the world runs on. The European Union mandated it as a standard back in 1987 or so. Verizon and Sprint use a system called CDMA. Code Division Multiple Access. Which is used in the US and South Korea and North America. Not too many other places. And the biggest difference between the two is that GSM, your subscription, the part of the phone that tells the carrier, yes you paid for it, is this tiny little sim card you can eject and pop right back in.
PEGORAROCDMA, it's sort of stored in the network, so there isn't really such a thing as an unlocked CDMA phone you can buy and use with any compatible carrier.
NNAMDIAs a matter of fact, Andrew, T-Mobile has invested heavily in LTE to expand its coverage area. Why are you moving in that direction?
SHERRARDWell, consumers want faster service. We've all experienced how great it is to really be able to download what you want when you want it, where you want it. And we've expanded LTE 'cause we want to basically give consumers what they need, which is faster access to the internet, be able to stream video. We now have the fastest LTE network in the nation, and we see a great opportunity to continue to expand in terms of both the quality and in terms of the footprint that we serve so that we can bring the model to all Americans and give them reliable and fast service that they need.
SHERRARDAnd LTE is really the cutting edge standard for the industry. It is the wave of the future, and you'll continue to see new updates and releases to that technology platform as we go through the years here, and continue to see evolution as the industry kind of continues to really create more and more access and faster speeds in their networks and handsets to take advantage of those.
NNAMDIIt's a "Tech Tuesday" conversation about choosing a mobile data plan and we're inviting your calls at 800-433-8850. What questions do you have about how to shop for a cell phone plan? You can send us email to email@example.com or go to our website, kojoshow.org. Join the conversation there. If you could take your current phone and switch carriers, would you do it? Why or why not? Give us a call. 800-433-8850. Andrew Sherrard, your "Simple Choice" plan is a year old this month.
NNAMDIWhat's the feeling about whether it's been a success for T-Mobile? The company has a lot more customers, but still is losing money.
SHERRARDYeah, I think, well, from a "Simple Choice" perspective, it's been an incredible success. We've been able to bring that simplicity and that transparency that we've just been talking about, so that people pay for their phone and their plans separately, so they can choose. Right? The customer's really in charge. They can decide what phone to get, they can finance a new one with us, or they can bring a compatible phone over, if that's what they want to do. And when they do pay off that phone, their bill goes down. So, it's a great -- it makes it easier and simpler to understand.
SHERRARDAs far as we've put millions of people on the plan, it's been incredibly successful. And one of the reasons we've been able to continue to gain momentum with it is because we've constantly added value to the play. So, you guys were just talking about roaming. Now with "Simple Choice," you can actually roam in over 120 countries and only pay 20 cents a minute for voice and texting and data is included. 2G roaming is included, so you don't get stuck with a big bill shock at the end of the month when you come home from your trip.
SHERRARDThe other great thing is you can -- we just doubled, announced that we're doubling the data and we're doing that for everybody, anybody on a "Simple Choice" plan, cause that's kind of our philosophy of how we want to go about this. So, I think it's been successful in attracting a lot of customers. It's been successful in giving them what they want, and, you know, our -- the industry has changed and we want to be a catalyst for change in the industry. We want to see -- we think we can make this a better industry for all consumers.
NNAMDIMaggie Reardon, unqualified success or would you qualify it?
REARDONWell, I would say, you know, it's definitely been successful. It's shaken things up, and as I mentioned before, we've gotten the larger carriers -- or T-Mobile's gotten the larger carriers to respond, which is great. But I think the real question is, you know, can T-Mobile keep this going? I mean, they lost 20 million dollars in 2013, you know. Can they continue to add more customers and make a profit, or are they too small? Do they need to consolidate?
REARDONThere's been some talk about Sprint wanting to buy T-Mobile and it doesn't seem like regulators are too keen on that. So, you know, we'll have to see. I mean, I, as somebody who advocates for consumers in my column and gives advice, I mean, I sure hope they stick around and they continue to shake things up. Because, for a long time, you know, nothing shook anything up. I mean, the carriers were the ones who were dictating the terms to consumers and the prices were just too high.
PEGORAROYeah. Exactly. I mean, T-Mobile has done a really good job of, I was gonna say disrupt, but that's a little overused. Shaking up the wireless industry. And I think it's fundamentally healthy to not have the carrier be this unmovable intermediary that tells you what phones you can buy. You know? That's not how it's done in a lot of the rest of the world. And, I think most markets, you know, you don't get to buy a cable box, cause your cable company picks it for you.
PEGORAROHas that resulted in federal hardware overall? Not so much.
NNAMDIAndrew, how many people arrived with their own phone as opposed to buying it from T-Mobile through a two year payment plan?
SHERRARDWe see, you know, it ranges anywhere from 10 to 20 percent of folks bring their own device over to -- on the "Simple Choice" plans. So, we see a bunch bring them over, we see a lot buy new handsets. A lot of people want the latest hand set, you know, whether it's the iPhone or the Galaxy series, so we see a mix. But more than before we introduced the plan, so...
NNAMDIHere, now, is Claude in Washington, D.C. Claude, you're on the air. Go ahead, please.
CLAUDEWell, thank you so much. Thank you for having me. It's a great topic. You had asked the question, would you or anybody out there get rid of their phone and why? I wanted to call in and say I'm trying to find any possible way to get rid of using Verizon, number one, because I pay, probably so much money to Verizon, for probably a thousand dollars a month, with cable and the phone service for the whole family.
CLAUDEIt's just become unreasonable. And then also, I am, I do want to get back to simplicity with my phone, so I can't wait to get a Blackberry, to go back to the keyboard and you know, with my, I call it a keyboard. And just the ability to surf the web. You know, the apps that -- I'm just a simple kind of guy. I don't need all of the apps that are out there. I don't want to spend, you know, two dollars a month or whatever the fees are to get these other apps that I just don't think are helpful.
NNAMDIRob, is T-Mobile the answer for Claude?
PEGORAROWell, you might want to look at prepaid service. I mean, if you're not looking to have a whole lot of data use, you know, there's this idea that you need unlimited data. Sprint makes a point of saying, you know, we offer it for this much. The most I've ever used in a month, you know, I check this on my phone every now and then. In fact, I'll check it right now, since a week ago I was in Austin for South By Southwest where it was really inflicting way too much use on my phone. It says I used only about -- let's pull it back all the way here. Haven't even used a gigabyte from March 6th through the 18th.
PEGORAROMost people, I think, like a gig and a half is about the median. So, you may find you can get by with a prepaid plan where you don't have the same huge choice of phones, but you can certainly find what they call a feature phone with a good enough web browser to do things like look up when is the next train coming, or what's the score of the Nats game? And that would save you a decent amount of money if you get out of the smart phone business entirely.
PEGORAROA Blackberry won't really save you anything in operating costs and you may -- they may not be around for too much longer.
NNAMDIExactly. Claude, thank you very much for your call. Andrew, Maggie mentioned earlier Sprint's desire to buy T-Mobile. We remember three years ago, the FCC blocked AT&T's proposal to buy T-Mobile, saying it would be bad for competition. Now, if Sprint buys T-Mobile, that would merge the third and fourth place carriers in the market. Does T-Mobile have a position on that possible acquisition?
SHERRARDI'm definitely not the right guy to talk about...
PEGORARORefer to your pay grade.
SHERRARDWhat I -- well yeah, it's above my pay grade, but what I will say is we've got a great plan to manage organically -- I think earlier you asked, can we continue? We think we've got great options. We're getting growth, which is the key to doing well in this market. And as long as you're growing customers and keeping them happy and continuing to add customers and satisfy their needs, I think there will always be an opportunity for us to continue to grow organically. And continue to succeed that way.
NNAMDIMaggie Reardon, do you think this sale will happen, and what would it mean for consumers if it did?
REARDONWell, I think it's a little too early to say, but I'm leaning more toward no. I don't think it's gonna happen. I think, you know, regulators have really backed themselves into a corner after the AT&T/T-Mobile merger failed. You know, they've been patting themselves on the back for the last year or so, saying look, you know, we were right. T-Mobile's a maverick. They're gonna shake things up and they have. We need four competitors. So, I think it's gonna be hard for them to do that, to take away a choice.
REARDONBut at the same time, I think the real question is, we have two major wireless spectrum auctions coming up, and I think the fear among some of these smaller players is that AT&T and Verizon are just gonna walk away with the bulk of the spectrum. And that's really the life blood of this industry, and what all these carriers need to grow. So, if T-Mobile doesn't have enough capital to -- or enough leverage to be able to get what they need to grow, that could be a problem and I think there might be some thinking, in terms of the regulators, about well, maybe we do need to let more consolidation happen so these guys are better capitalized to be able to compete.
NNAMDIRob, think it's gonna happen?
PEGORAROI can't imagine it would either. Because, yeah, blocking AT&T/T-Mobile worked so well. I think that's the single most pro-competitive thing the government has done in the wireless market since mandating number portability. You can take your phone number with you from one carrier to the other. The other thing it did, you know, AT&T had agreed to pay a huge breakup fee to T-Mobile if it didn't go through and cough up a bunch of spectrum.
PEGORAROSo, I really hope T-Mobile sent the AT&T folks a fruit basket or something when the whole thing fell through, cause they've made out very well from the deal not happening.
NNAMDIAndrew Sherrard, thank you so much for joining us. Good luck to you.
NNAMDIAndrew Sherrard is Senior Vice President of Marketing with T-Mobile. We're gonna take a short break. When we come back, we'll continue our conversation on choosing a mobile data plan with Rob Pegoraro and Maggie Reardon. If you've called 800-433-8850, hang on. We'll get to your call. If the lines are busy, shoot us an email to firstname.lastname@example.org or send us a tweet @kojoshow. I'm Kojo Nnamdi.
NNAMDIWelcome back. It's "Tech Tuesday." We're talking with Maggie Reardon, Senior Writer and author of the "Ask Maggie" column at CNET. She joins us from NPR's Bryant Park Studios in New York to have this "Tech Tuesday" conversation about choosing a mobile data plan. Rob Pegoraro joins us in our Washington studio. He's a freelance technology journalist. Rob writes a weekly column for USA Today and writes about policy at Yahoo Tech. I'd like to go directly to the phones where Diane in Laurel, Maryland awaits us. Diane, you're on the air. Go ahead, please.
DIANEHi. I just wanted to let you know that I've been an AT&T customer for 12 years, and the reason that has happened is because AT&T really has gone out of their way, in those times, to win me over. I had T-Mobile pushing really hard last year for my business, and AT&T won me because they gave me 200 dollars in credit, which basically paid for the phone to get the two year plan. But, that aside, I did want to say that during all the years of all the cell phone and carrier business going on, the main thing that's probably frustrated me and other consumers is that we want to be able to choose the phone, the newest phone whenever it comes out.
DIANEAnd have a plan with it. And we haven't been able to do that, because usually the new stuff comes out before the two years are up. So, as I see it, and you can tell me, explain this a little bit more for me, if you would, it seems to me somebody is controlling our freedom or doing that. And is it a coexistence between the carriers and the phone companies? Cause I noticed with certain plans, you can only get with certain carriers and certain styles and colors and things like that.
NNAMDIYou raise a very important issue. Rob Pegoraro, as Diane is pointing out, when you have a two year contract that includes a phone payment, the incentive is to upgrade as soon as you are eligible. So, what should Diane do? What's the best way to decide whether it's time to get a new phone at all?
PEGORAROI'm getting flashbacks to every time that Apple's introduced a new iPhone, and all the times people asked, when is the iPhone gonna come to Verizon? A lot of the major phones, they actually come out on somewhat predictable intervals. Apple ships a new iPhone every year, and not more often than that. So, the 5S and 5C debuted in October. We should see a new one come out this October. And, of course, there's already way too many rumors running around about that. Samsung, they just introduced the Galaxy S5 at the beginning of March -- at the end of February.
PEGORAROIt should be around, I guess, in April. And they'll probably have a new phone in the fall. They're more like an every six month timetable. The thing is, the rate of progress in smart phones is slowing down a little bit. It's not as if each new one is gonna represent a huge advance, like say, going from the iPhone 3GS to the iPhone 4, which was thinner and smaller and it had a much better display and hugely improved camera. A lot of the improvements are more at the margin. You know, the Galaxy S5, Samsung, is talking about -- it has a heart rate monitor on the back.
PEGORAROYou can hold your finger to it, and it'll tell you what your, I guess, if you need to go see a doctor right away. Maybe not something you need to get right away. And I think the way smart phone batteries wear down over time, you do need to replace yours eventually. Or at least buy a new battery for it. But, buying every two years, you may not want to do that, and every year can get to be a really expensive habit.
NNAMDIAnd Diane, thank you for your call. Good luck to you. Maggie, we got an email from Peter who says, I have full voice/text data service through Republic Wireless for 20 dollars a month with no contract, and great service using a Motorola phone and the Sprint network. This option has been around for several years with Republic and others. T-Mobile is hardly the first, although it may be the first major carrier to adopt this model. I suspect that the highly touted T-Mobile low cost plan is a reaction to greater interest in plans like mine, says Peter. What do you say, Maggie?
REARDONWell, Republic is one of the companies that I've been following, and yeah, it's a great plan, but, you know, there's always a catch. When you're getting something for that little amount of money, you know, there's got to be a catch. It's too good to be true. Well, the deal with Republic Wireless is they're using Wi-Fi networks to deliver voice and text messaging and data. And when Wi-Fi is not available, they've contracted with Sprint and the service then runs over Sprint's network. So, essentially, you're tied to either Wi-Fi or Sprint's network. So, if Sprint doesn't work where you live and go to work, or commute, then it's not gonna be a good solution for you.
REARDONThe other issue is that the phone selection's very limited. You know, I think they started out with just one phone, initially, and that was really just like about a year or two ago. Now, you know, they have a little bit of a wider selection. Just a few more phones. They're carrying the Moto X, which is a phone that I really think is terrific. You know, Rob mentioned it earlier. It's 299 dollars. Or, I think he mentioned the cheaper Moto G, which is also coming to Republic. But anyway, it's a good phone. From what I hear, and from the experience I've had, the service, Republic service has gotten better.
REARDONBefore, I think there were some issues with the voice quality. People were dropping out when they were going from Wi-Fi to the Sprint network, so it wasn't completely seamless. And then also the other complaint I've heard is there's virtually no customer service, so if you have a problem, you're kind of, you know, you've gotta go to the message boards and figure out how to fix your phone or your service from the other customers who are struggling.
NNAMDIOn to Kim in Washington, D.C. Kim, your turn.
KIMThank you, Kojo. Thanks for taking my call. I have two things to say. First of all, I too have been with AT&T since '99, and we recently switched to the Value Mobile Share Plan, which basically, for the three lines that we have in our house, we get 10 gigs, which, we use maybe one gig a month between the three of us. My husband, myself and our au par. And then, so since this is the first time we're on there, we're -- my plan is coming up for renewal in the two years, ready for an upgrade, but if I upgrade through AT&T, my price is gonna go from 15 dollars for my phone to 40 dollars for my phone.
KIMSo, this is basically a deterrent for me not to upgrade through AT&T, and for the first time, I'm actually looking at sources outside of going to AT&T to buy my phone, such as eBay. And yeah, and I'm like, I'm just like, this is a strange thought to me, cause previously, you know, the last 15 years, I've just said, oh, let me go to the AT&T store and see what they have, so I'm shopping and it's just -- it's a strange experience for me. I think I'm doing the best thing for cost, because by buying outside, I'm saving myself 600 dollars for the two year period. So...
NNAMDIRob Pegoraro, more choice. This is why you approve of this.
PEGORAROExactly. What I would look at -- I mean, eBay is certainly one option, although, you know, you are buying a used phone and you want to -- it's your only -- that's gonna be your only way to get an iPhone for cheap. If you're open to using Android, I would take a really good look at the Nexus 5 or the Moto G or the Moto X. They're all good phones. They're relatively recent. The G is only a few months old, as I recall, and has gotten really good write-ups. And with that, you don't have the sort of weirdness factor of where has this phone been?
PEGORAROAnd you do get -- and the nice thing about buying an Android phone directly from Google, in particular, is you don't wait for software updates. When they're ready, you get them within a few days. You don't wait for months and months for the carrier to determine that the update that Google already tested will not actually melt down the phone or incinerate a tower somewhere.
NNAMDIWhere has this phone been? That's definitely a weirdness factor. I would not have thought of that.
REARDONThe other thing I just want to add to...
NNAMDISure. Go ahead, Maggie.
REARDONWhat Rob was saying is also, with AT&T, if you're paying for 10 gigs and you're only using one gig, scale down your data plan. I mean, you don't need to be paying that much. You know, and the other thing is, on the Share Value Plan, you'll be saving 15 dollars a month, per phone, for every phone that you don't have to pay this subsidy for. So, again, that's another way to limit the cost. And that's exactly what -- you know, I had my husband switch over from Verizon so that we could both be on AT&T, share our data and also use a phone that we already have. And I agree with, you know, I love the Moto X.
REARDONMoto G, the only downside with that is it's not a 4G phone.
REARDONSo, it won't be as snappy fast.
NNAMDIKim, does that work for you?
KIMYeah, and I'm actually looking at the Windows phone, and I'm trying to determine between a Windows, which I currently have and the Android. I think the Windows, for me, is easier to use, because I like -- I use it for work a lot, and so I have a lot of the Word and Excel. And so I'm going back and forth as well. And I'm also looking at the phablet, rather than a phone it -- cause I only want one device, so...
REARDONWell, a phablet's gonna cost you more. The Windows phone, if you've already been using Windows and you like it, stick with it. I mean, I think that's a great operating system. I think the only problem with that is you don't have the breadth in choices of apps, because they're just not there with Android and IOS. But, you know, I think you can get some really great phones. I think Nokia has got some inexpensive Windows phones. They seem to be trying to hit that market a little bit. You know, more of the value customer.
REARDONI mean, they wouldn't admit that, but some of their phones definitely, you know, you can get for cheaper. So, you know, I think that's a good choice if that's an area you're already leaning. The Phablet you're gonna pay a lot for, cause they're expensive, and they're also in high demand, so even getting one used, you're still gonna pay a lot.
NNAMDIKim, thank you very much for your call. Rob, outside the United States, it's much easier to take your phone with you when you change carriers. Why do so few phones here in the US work on more than one carrier?
PEGORAROWell, part of it is those two different standards I mentioned. CDMA is just sort of not built for that kind of use case. GSN is. The other thing to consider is the different bands in use. Most new phones, these days, support LTE, but there isn't any one LTE. There are a bunch of different bands, and they're not always compatible. Sprint uses one called band 25 that doesn't really -- that's not gonna work on too many other parts of the world. And the same thing has happened with GSM, when the iPhone first came out.
PEGORAROYou know, there were people who would unlock their iPhones to use them on T-Mobile. And that worked, except you would only have 2G data, what's called "Edge." Really slow, like maybe twice dial up. And that was because, at the time, T-Mobile didn't have 3G service on the same frequencies as AT&T. They've since been upgrading their system, so now an older iPhone will have 3G service in a lot more places.
NNAMDIHere now is Scott in Rockville, Maryland. Scott, you're on the air. Go ahead, please.
SCOTTHey. Yes, thank you. I enjoy "Tech Tuesday." Yeah, I got a few quick points, hopefully. I've had Verizon for almost 20 years now. The smart phones came out. We got two unlimited data plans. And we've updated our phones several times. In the past, they've always let us, you know, upgrade our phone, keep the plan. Now they're saying, you know, of course, we have to purchase the phone, or if we get the phone, we have to get a new plan. And we lose our unlimited data, which we don't come close to, probably, anyway. We use about a gig and a half, two gig, maybe three gig.
SCOTTBut, you know, it's the principle of the thing. I've stayed with them for years, cause I've had the unlimited data. Now they want to take it away. The other thing is, you know, my last phone, I had a Palm phone, which had a built in app where I could -- had a built in Wi-Fi hotspot where the kids could be in the backseat. I've had the hotspot on. Their iPods would connect, and they would be able to share my data plan, which, of course, was unlimited. And I got a new Android phone, and I found an app for that, from what was it?
SCOTTSBTP Hotspot app that I paid 14 dollars for, and I was happy to do. And again, I could share my unlimited data, and the kids would be in the backseat and they'd be happy and everything, and I could use my laptop with the unlimited data. And then Verizon's last update, I guess last July, broke that app. I don't know. It's a one man shop...
NNAMDISo now, your dilemma now is?
SCOTTWhat do I do?
REARDONAnd I would say the truth of the matter is you don't really need the unlimited data most of the time. So, you know, if you move to one of their share everything plans and you get enough data for the month, you know, most of the phones that are sold today, you don't even need an app to be able to do the tethering. It's just sort of a function that's built in to the phone. I know my Moto X, which is an Android phone, has that built in. And, you know, it was very easy to set up. And you can turn it on and off, and you don't have to use it all the time.
REARDONSo, you know, unfortunately, Verizon in particular, you know, they don't want you on the unlimited data, and they're trying to get as many customers off that as they possibly can. And, you know, that's just sort of the reality of what's happening. But the good news is you probably really don't need unlimited. So you may not even notice that this is a problem for you. And you're probably, you know, there's a potential you could even pay less per month.
SCOTTBut even with the unlimited data, I mean, or with the tethering, they still want another $30 a month for that feature.
PEGORAROThat's what changed with...
REARDONThey don't under -- yeah, not with the new plans. It's included, so it's just, you know, their plans are designed to encourage you to attach other family members, other devices on to it. You don't have to actually sign up for, you know, an extra charge for it. You can just sort of turn the tethering feature on and share the data, you know, when you want. And you're not going to be charged extra for that.
PEGORAROThat's one nice change that I guess I had -- didn't pay enough attention to at the time it was happening. All the carriers these days, except for Sprint, no longer charge extra for tethering. It's part of the standard bundle -- Verizon Share Everything, AT&T Mobile Share, T-Mobile Simple Choice. Sprint, it's still an add-on. So, yeah, in this case, where you've been getting away with unauthorized tethering, you know, right now you're spending less. You might find that versus paying for it under your current plan or switching to a new one with a lower data cap, you'd save a little less or spend about the same.
NNAMDIGot to take a short break. When we come back, we'll take your calls. If you've called, 800-433-8850, or if you've sent us an email to email@example.com, what change would you like to see in the wireless communication industry? You can also send us a tweet, @kojoshow, using the #TechTuesday. I'm Kojo Nnamdi.
NNAMDIWelcome back to our Tech Tuesday conversation on mobile data plans and how to choose one. We're talking with Maggie Reardon, senior writer and author of the "Ask Maggie" column at CNET. And Rob Pegoraro, he's a freelance technology journalist. He writes a weekly column for USA Today and writes about policy at Yahoo Tech. We got an email from someone who said, "Why has the price of smartphones not decreased due to mass production? Shouldn't the parts get cheaper because so many are made, making the whole phone cost subsidy irrelevant?" Maggie.
REARDONWell, that's a good point. And, you know, I think in all fairness to the phone companies, it's a tough business. I mean, these -- they're not making very big margins on these devices to begin with. But I think part of the reason why the prices don't seem to have come down very much is because we've had this subsidy model in place where the carriers are paying the bulk of it, and the consumer is really comfortable paying about $200. But as we sort of move away from that, we are starting to see the prices coming down. And Google has really been driving that with its Nexus series of phones.
REARDONAnd then after it bought Motorola and it rolled out the Moto X and the Moto G, it really concentrated on keeping those prices down. You know, I hope that that will continue. Motorola was just -- that division was just bought by Lenovo. So I'm hoping they'll continue that. But I think as plans like T-Mobile's Simple Choice plan really kick into action and we see more customers from AT&T who are shopping around and choosing their own phones, you know, hopefully, we'll see some pressure to really come up with phones that are less expensive.
REARDONAnd I think, you know, Rob sort of made this point a little earlier about, you know, there isn't a lot of really whiz-bang new hardware that's coming to a lot of these phones that are being introduced now. And it's not that the innovation is sort of over and now there's nothing else to innovate on. It's just it was growing so rapidly, and it was -- things were advancing so quickly. And I think a lot of that was because we had the subsidy model, and companies could make these really incredible devices that were relatively cheap to the consumer.
REARDONBut as consumers become more price-aware, you know, I think we'll have a broader range of products for this market. And, you know, I think that's really good. I mean, if you look at the laptop market, for example, I mean, you have really expensive ones that are very high end, have all the highest-end components, and then you have one that you can get for $500 that's cheap. And you have -- there's a market for both of them.
NNAMDISame question to you, Rob.
PEGORAROThe other factor I'd point to is this thing called the rest of the world where, you know, $650 -- or $550. Remember when the iPhone 5C was the cheap iPhone? It's not the most cheaper. It's just 'cause the whole price is hidden. They're not cost-competitive in a lot of other overseas markets.
PEGORAROIt was really instructive to me to go to Mobile World Congress, this wireless trade show in Barcelona last month, and see all these phones intended for sale in places where, yeah, a $500 phone is not going to cut it. I saw one phone that's designed to be made for $25. And it actually runs a pretty good operating system based on the Firefox Web browser. And they think they can profitably sell a phone based on that design for 25 bucks.
NNAMDIWhat else are we missing out here in the U.S.? You've attended tech shows around the world, like you just mentioned in Barcelona, Spain. You've seen innovative phones that are not available here, like a phone with two SIM cards.
PEGORAROThe dual-SIM phone, I had never heard of it until I went to MWC last year. And I guess the idea is, you know, here, it's a kind of a pain to bring your phone from one carrier to another. But this one, you just tap a button. And so you might have one carrier that has a really good deal on data, so you use that SIM for your Web browsing.
PEGORAROAnother one has a really good calling deal to other subscribers, so you use that one as well. Probably the neatest thing I saw this time around was a phone that can charge another phone. The (word?) phone where you can plug in another phone to it and recharge your own phone off the massive battery inside that one.
NNAMDIWhoa. Anything you'd like to add to that, Maggie?
REARDONYeah. I mean, I think, you know, the dual-SIM thing is neat. It -- you know, it doesn't make a lot of sense necessarily for this market because our services are so -- they're just all very much the same. But, yeah, I mean, I think there's still some innovation left. I think consumers really have to catch up. You know, again, I think a lot of people were buying phones that had way more technology than they could even use and even ever figured out how to use. So, you know, I think it's OK to sort of have the market correct a little bit here and have more of a broad spectrum for people to choose from.
NNAMDIHere's Mike in Severn, Md. Mike, you're on the air. Go ahead, please.
MIKEHi, Kojo, Maggie, and Rob. Just another option -- this is kind of in the Republic Wireless business model is Scratch Wireless. I'm not sure if you've heard of them. They're based out of Cambridge, Mass. But they also lean on Sprint as the external network but use Wi-Fi primarily. And then in their model, you just pay for the phone.
MIKEAnd they're offering a Motorola Photon Q. You spend 250, and if you don't want to, you don't have to have any monthly plan. And they get you where if you want to go outside and use it externally, you buy either a day pass or a month pass, and that takes care of your voice and data needs if you're away from a Wi-Fi connection.
MIKEIt might be great for a college student, somebody who's -- has Wi-Fi all the time. Even if you wanted to pay for the monthly pass, I think it's like 15 bucks a month, so it's a real good alternative. We have five phones in our family, and it's all Verizon now. And I've been trying to find a way out of that and have been exploring them and Republic. So I'm just curious if anybody'd heard of them and that business model.
NNAMDIRob or Maggie?
PEGORAROThey're new to me. But the basic concept of Wi-Fi offload is saying that the industry as a whole is moving to do just because, you know, Wi-Fi is cheaper for them to provision. There's a technology out there called Hot Spot 2.0. It's supposed to make it automatic for your phone to switch to Wi-Fi and to do all its business over that. Republic is very early on, and, you know, I've seen them evolve. When I first tried Republic last summer, it was not that good. Your call would drop if you went from Wi-Fi to cell.
PEGORAROTried them again a few months back, and much more seamless. You know, it's not so obvious that you're using this phone that is not really on the mobile airwaves. I don't know Scratch. But the basic concept there, yeah, 'cause, you know, if you have some source of broadband you can share over Wi-Fi, it's -- you know, you're usually better off using that instead of global broadband anyways. It's better on your battery, does good interior usage quota.
NNAMDILarissa, (sic) thank you very much for your call. Maggie, we got an email from Allison who says, "What is the coverage offered by T-Mobile versus that offered by Verizon or AT&T? Can I go to Kansas and use my cellphone if I'm on the T-Mobile network?"
REARDONIt depends on where you go in Kansas. T-Mobile is primarily -- most of their network is in major cities, in metro areas. And unfortunately, their coverage outside of those cities is not very good. So let's say, for example -- I live in New York City. I know lots of people who have T-Mobile here. But if they work in New York and they live in New Jersey out in the suburbs, that could be a problem because, in a lot of places in New Jersey, there isn't very good T-Mobile service.
REARDONSo that is the real problem that T-Mobile has because, you know, by contrast, Verizon, that's one of the great things about it -- and I think probably why so many people -- even though they're so angry that they pay as much as they do every month for that service -- they do it because the phone works where they need it to work. And that's really T-Mobile's biggest problem. And it's also a big problem that Sprint has, too. I mean, they're also very concentrated in metro areas.
REARDONAnd that's great because that's where a lot of the people live. But the thing is, is with your phone -- and this is the same problem that Republic Wireless has or Scratch has -- is, you know, you don't stay in one place. I mean, these are mobile phones, so you either go to other places, you know, to live and work, or you even travel.
REARDONI mean, when people travel for work. Or let's say, you know, you have a vacation home someplace or you even go on vacation anywhere, I mean, the expectation is that your phone is going to work in those places. And when it doesn't, it's really disappointing, and it just -- it doesn't matter that you're only paying $15 a month or even $40 a month for your service. If it doesn't work, then you simply can't have that service.
NNAMDIRob, I know you cannot tell each of us which phone and data plan is best. But what are the questions we should be asking both ourselves and the carriers to figure out the best combination of price and service?
PEGORAROWell, coverage, that's got to be critical. And I'm glad that came up because, yeah, I mean, I use T-Mobile as well. And there are a lot of parts where the data speed will drop to 2G, which, you know, is fine for having my email trickle in. But I'm not going to be doing any -- a whole lot of Web browsing.
PEGORAROThe odds are definitely higher that I will, you know, may not have much of a signal at all if I go far enough out in the countryside, whereas Verizon wouldn't have that. But it's a lot cheaper. And I spend most of my time in the city, so I'm OK with that. You got to look at that. I think one thing that's gotten a lot easier is worrying about how many minutes or texts you're going to send because nobody meters that anymore.
PEGORAROAll the current plans -- or at least among the subscription, non-prepaid options, that's all covered, which leaves data. And I think most people think they use more than they do. And it's not always easy to find out. For a while, there was no easy way to look that up in IOS. In Android, it's gotten easier. But I think if you ask the average person, how much data do they use, they will give you a number that's twice as much as it is.
NNAMDIMaggie, can you reiterate for us, why did you switch yourself and your husband to AT&T and which phone you use?
REARDONWell, I use a Moto X, and I had had a Samsung Galaxy S3. And so I wanted my husband -- he was on Verizon and had been on Verizon forever and was basically like, you'll never get me to AT&T. And then we saw this deal...
PEGORAROThe dark side.
REARDONRight, exactly. We saw this deal where, you know, if you bring your own phone, it's $15 less a month per phone. So I said, this -- you know, we need to cut back on some costs here. We were just having a new baby. We needed to pay for our nanny. So...
REARDONYeah. So I was like, we need to make some major cutbacks here. So that plan was perfect for us, so we save $30 a month. He moved over. He's happy with the service. I gave him my old Galaxy S3, and I bought the Moto X. And, you know, it's worked out perfectly for us. You know, I mean, again, it may not be for everybody. And I think what you really need to do when you're searching for a new service is go on the websites of these companies. Well, first, you have to determine which service is going to work for you in terms of coverage.
REARDONOnce you've determined that, then actually go on the websites and start plugging in how many phones you need, whether you need to buy the phone, whether you already have the phone, and really price out the service, and then you can get a clearer picture of what the differences are and how much you're going to spend each month. And I think that if you have teenage kids or maybe even some college kids -- I know a lot of people are getting phones for their middle-schoolers and so forth -- you know, some of these prepaid services might be a better deal for you.
REARDONFor example, the Republic Wireless or Scratch, as that one caller mentioned. So you don't have to keep the entire family on the same family plan, although sometimes that's less expensive. So you might just want to explore your options. And, unfortunately, you have to do the legwork yourself, or you can write to me, and I'll try to help you in my column. But I can't answer everybody.
NNAMDI...is a senior writer and author of the "Ask Maggie" column at CNET. Anything you'd like to add to that, Rob?
PEGORAROYeah, same thing. If she doesn't answer your email, write to me, and I may be just as slow at answering it.
NNAMDIMaggie, right quickly, we're seeing a lot of commercials for Sprint's Framily Plan. Who would benefit from rounding up 10 family members or friends to sign up for this?
PEGORAROI hate that word.
REARDONWell, that's the thing. You have to have a lot of people that you want to, you know, consider your framily, friend or family. You know, that plan, you know, I think, if you're a Sprint customer and you can get some more people to join with you, it could be useful. I think you need about seven people to actually get the cheapest cost per customer on that plan.
NNAMDIMaggie Reardon, thank you so much for joining us.
REARDONThanks for having me.
NNAMDIMaggie's senior writer and author of the "Ask Maggie" column at CNET. Rob Pegoraro, always a pleasure.
NNAMDIRob is a freelance technology journalist who writes a weekly column or USA Today. He also writes about policy at Yahoo Tech. Thank you all for listening. I'm Kojo Nnamdi.
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