Back in May my iPhone broke. The connection with the charger had worn out and would no longer charge. I wasn’t quite due for a new phone and I knew that new models would be coming out in the fall, so I decided to hold off as long as I could. In order to get through the next several months I bought a Windows Phone, off contract for $50. That phone has served it’s purpose for the last few months, but it’s something that I don’t want to keep long term. Overall I like the phone. I’m not huge app user; even though there have been a few apps that I have missed. The biggest deciding factor for me has actually been the camera. I used my camera on the iPhone constantly. On this Windows phone the quality just isn’t good enough and the camera application is sloooowww. So slow that I have missed several shots. It’s just not acceptable.
If you have bought a new cell phone over the last year or so you may have realized that the cell phone companies have changed the way they sell you a phone. It used to be that the typical service contract went something like this: you sign up for a two year contract and you get a new phone as part of that commitment. If you got a fancy phone then you might pay an upfront fee for that, but in general the cost of the phone was included in the price of the service you paid for. For us, our monthly service runs about $195 after taxes, I paid $150 for my iPhone when I renewed our contract two years ago. I have always felt this was too expensive, but I paid for it anyway. If I bought my phone elsewhere the cost of the service would have been the same. I just wouldn’t have been locked into a 2 year commitment.
Recently, however, the phone providers have realized that people want more flexibility with how they pay for their phones and how often they can upgrade. Many people no longer want to wait two years for an upgrade, they want to upgrade yearly. So, you can now buy that new phone through your service provider, but it’s no longer coupled with your service. The promise is that you can get the phone you want, make a monthly payment on that phone for the term you choose, and your monthly service will cost less because you will no longer be subsidizing the cost of your phone with your service.
Is this a Good Deal?
Now, let’s put aside the issue that you are actually financing the purchase of your phone for a moment. How much does this actually end up costing you? Since I’m a long term iPhone user and that’s the device that I would prefer to use, I’m going to use that as an example. On At&t, I can get the new iPhone 6s 16GB model for $649.99 or $21.67 for 30 months. If I go directly to Apple, I can buy the same phone for $649.99 or I can get it for $32.45 over 24 months (which comes out to $778.80). That’s for the base model. If I upgrade to the middle tiered phone it’s $898 over 24 months! That’s a lot of money. And when did it become acceptable to finance your phone over 30 months! Automobiles used to be the only thing we would be willing to finance that long.
And that’s just for the phone. I haven’t even talked about the phone service yet. I’m currently paying for the 6GB Family Share Plan. If I bought my phone outright, I can save about $15/month on the plan. If I did that for both Carrie and I then my phone bill would be about $160 for the same level of service.
As someone who strives to lead a more meaningful life, focused on less meaningless consumption and more value, this just doesn’t work for me anymore.
A Better Option?
This has lead me to Republic Wireless. They have a different model. They don’t subsidize your phones and they will actually refund your money for any of the service that you didn’t use that month. That sounds refreshing. So, I have bought a new phone for $229. I signed up for the unlimited text and talk and 2GB monthly data usage. Based on my average data usage on At&t, I expect to get a refund each month, probably about $10. In general I believe I will save between $30 and $50 a month. Once I’ve used it for a few months I’ll do a follow up post to let you know how it actually has worked out and whether the service has met my expectations. Honestly, though, the fact that I’m not locked into a contract, I pay for what I actual use, and that I paid a reasonable price for the phone is already a positive thing.
Side note, Google has recently started offering a new service called Google Fi which is very similar. It’s slightly cheaper, but since it’s still in beta I went with the service that’s been around for a while.