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Buying a new phone used to be easy. You paid your carrier $199 for a new smartphone, agreed to a 2-year contract, and were on your merry way. Today, however, buying a new mobile device and wireless plan is a nightmare.
Carriers are moving away from the old subsidized model, in the hopes that consumers are willing to pay full price for their smartphones in exchange for slightly cheaper data plans. Moreover, some carriers now offer leasing options, and with manufacturers like Apple and Google entering the picture, consumers are faced with dozens of choices.
The good news is, if you can navigate this maze, you might actually get a plan that's cheaper in the long run than your old subsidized one. But, in many ways, it's incredibly confusing to make sense of it all. Below are a few smartphone-buying pitfalls to watch out for.
Cell phone plans were never designed to be consumer-friendly, but these days, they're less transparent than ever. From the industry's ever-changing definition of "unlimited" to the most recent installment/leasing options, if it looks too good to be true, read the fine print. Many unlimited plans involve throttling once you hit a data cap and many promotional prices are subject to change at the carrier's discretion.
The smartphone industry wants you to upgrade your smartphone every year, and mobile carriers are trying to ensure that this happens. From Sprint to AT&T, carriers are now encouraging their customers to "lease" their smartphones, rather than buy them. For the consumer, that means you get a new smartphone every year. For the carriers, that means you're constantly paying for a phone that will technically never be yours to keep and resell. Moreover, with so many leasing options, it's almost impossible to tell the plans apart.
There was a time when customers primarily paid for voice and text messaging. These days, carriers are practically giving that out for free. The cost of data, however, is in flux. While it's true that some carriers like Verizon have tried to make their data plans more transparent, there is still no one-size-fits-all model when it comes to data. And very few carriers let you pay just for the data that you use. Even grandfathered customers are seeing price increases on their unlimited data plans. That means chances are you'll overpay for data regardless of which plan you choose.
Choices are good for the consumer, but too many choices can complicate matters. Earlier in the year Google launched Project Fi, a mobile virtual network operator (MVNO) that uses cell phone towers from Sprint and T-Mobile in conjunction with WiFi to provide seamless tower-to-WiFi phone coverage. The plan is perhaps the most transparent mobile plan on the market, but for now it only works on select Nexus devices. Google also just announced its own warranty plan called Nexus Protect, which could make some users second-guess their current warranty plan.
Moreover, last month Apple announced it would offer an iPhone finance plan for customers who prefer to lease their iPhone direct from Apple. Although the plan includes AppleCare, it's one of the more expensive offerings on the market. Unlike the Google example, this is solely for purchasing your phone, and does not include wireless service.
Although the industry is making a transition toward unsubsidized plans, certain carriers like AT&T and Verizon will still let customers purchase 2-year subsidized phone plans. For Verizon, you'll need to be grandfathered into your subsidized plan, meaning new customers can only purchase unsubsidized phones. AT&T, however, lets both new and old customers purchase subsidized phones. The catch is you must make your purchase at a brick-and-mortar AT&T store or direct via AT&T's website. You can no longer purchase subsidized AT&T phones via third-party merchants like Best Buy or Apple.
Although pricier than their contract-ridden alternatives, unlocked smartphones have typically been preferred by most users because the latter handhelds give you the freedom to switch carriers whenever you want.
However, as PC Mag notes, owning an unlocked phone doesn't always mean you can switch to whatever carrier you desire. Unlocked phones typically work only on GSM networks (AT&T and T-Mobile). While there are some models that will work on all of our main networks, finding these specific SKUs can be tricky since they're typically only sold via the manufacturer's website. As a result, the average consumer might not know all of the bands that their latest iPhone 6s supports, and wrongly think an unlocked iPhone can work on any network.
Using your smartphone outside of the United States can create a nightmare scenario for your wallet. That's because many carriers still charge steep roaming fees for the privilege of making calls or using your data plan while abroad. Verizon, for instance, offers a dizzying amount of travel plans, and carriers like Verizon and T-Mobile even offer special plans for cruise ships where, depending on your cruise liner, data can cost upwards of $15/MB. Google's Project Fi is hoping to kill roaming once and for all, but we've still got a long way to go before we can get there.
Would you pay a premium for a new 5G smartphone knowing that coverage is still low? Verizon is hoping you will. The carrier recently announced that it would start field-testing its 5G network next year, which according to Verizon is 30 to 50 times faster than its current 4G network.
However, as rival AT&T points out, the industry has yet to agree on standards for 5G networks, which makes any preliminary talk about 5G nothing but talk.
Despite the migraine-inducing confusion, today's smartphone plans do have a massive advantage over the previous years' plans, and that's diversity. Consumers now have a wide range of phones and packages to choose from, and although the package that's best for you may not always be apparent, it's better than having little-to-no options whatsoever.
Readers, do you have more confusing phone industry quirks to add to our list? Share your thoughts in the comments below!