Orange County Register

Note: This is part of a series on finding cheaper cell phone plans.

I never thought much about prepaid cell phone plans. I didn’t want to mess with phone cards or  high per-minute fees. And I wanted a cool phone that didn’t deplete my bank account.

But since my T-Mobile contract was over months ago, I decided to look at all my options. Pre-paid plans are quite attractive these days and not just because they can save oodles of money.

At prepaid carriers like Virgin Mobile, you can get started for $10 for the phone and $20 a month if you talk less than 200 minutes. Per-minute charges range from $0.10 to $0.33.  And no contracts, no early termination fees and no credit checks. But coverage areas can be limited, phone choice mediocre and, as the daughter of an OC Register Mom blogger discovered, phone cards expire. 

So why go prepaid? Consumer Reports recently explored the niche in a reader survey, finding that 76 percent chose prepaid because it cost less than a monthly plan, 70 percent went prepaid because they make calls infrequently and 47 percent said they like the no contracts. 

Consumer Reports’ conclusion: A family with 2 phones and a 700-minute plan could save $220 a year by going prepaid with Virgin Mobile.

Prepaid users make up between 15 to 22 percent of all cell phone users in the U.S., according to various reports. Current Analysis, a market research firm, counted up at least 36.4 million pre-paid customers belong to Boost, T-Mobile, TracFone, Verizon Wireless, Virgin Mobile, Leap Wireless and MetroPCS. AT&T numbers were not available.

“And now that the differences between prepaid and postpaid plans have become more and more blurred, consumers have begun to look at what prepaid has to offer them, especially at a time when they might not have as much to spend,” said Matthew Kunkle, a wireless services pricing analyst for Current Analysis. 

Value has become a big push for prepaid companies. One of the first prepaid companies, Irvine-based Boost Mobile, now finds itself competing with prepaid programs from AT&T, Verizon and T-Mobile. It retrenched and recently dropped its youth-oriented marketing campaign to focus on value, hoping to attract users who don’t care about extreme sports or hard rock.

“Youth is still a good market but when you look at the category where growth is, it’s beyond youth if you want to become a national player,” said Matt Carter, Boost Mobile president. Boost Mobile is only on the West Coast available nationwide, though its prepaid unlimited service varies by region (corrected Dec. 26, 2008).

Boost is fashioning itself into a ‘value plus’ player – that is, not the cheapest, but the one with the best features for the best price. Its new $1/day plan offers unlimited texting and free night and weekend minutes. Day-time minutes are $0.10. 

Beyond the per-minute prepaid plans, a new trend is prepaid monthly service, such as T-Mobile’s FlexPay, AT&T’s GoPhone Pick Your Plan and Boost Mobile’s Unlimited plan. These services offer the same features as regular plans, but no contract. I was most impressed with MetroPCS, a pre-paid monthly service that has been in the Orange County area since September 2007. For $50/month, users get unlimited voice, messaging, web and e-mail. (More on this company tomorrow.)

“The heavy-talker is the one group I would say are not a good candidate for prepaid as prepaid calling rates are generally slightly higher than those offered with postpaid. But again if they really do your homework, there are prepaid plans out there that the heavy-talker can get by on,” he said.

MetroPCS, in fact, offers one of the lowest unlimited plans available — $30/month for unlimited calls. Add $5 and get unlimited calling nationwide.

“I do think that more consumers (not just those with credit issues) are looking towards prepaid these days simply because the market has become very competitive,” Kunkle said.

The comparisons (Don’t see a company you’re interested in? Let me know and I’ll add it):

Related stories:

Battle of the text-messaging plans: Who is the cheapest?

Check out my new guide to cell phone services in Orange County at gadgetress.freedomblogging.com/cellphones

For more cell phone news affecting Orange County residents and beyond, visit the Gadgetress cell phone archive.

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