US Cellular Carrier Family Plans – Q1, 2010

The second installment in our new quarterly reports on the state of the Great American Cellular Plan is in front of you. This time, we are taking on the Family plans offered by the US national cellular service providers, just as we took on individual plans in the first part of the series, because, let’s face it, there are people out there who actually have families. Not only that, they want to talk to them. A lot. For free. We will look into individual and family offerings so every 3 months and you will be able to read our analysis of the offers and costs involved, including real costs you pay at the end of the month before local and federal taxes. As large parts of these articles are dedicated to explanations of what we did, why we did it and how we did it, we will be doing a lot of copy/pasting. We will highlight the updates to make them easier to find.

Introduction

The cellular plan landscape is a moving target, with competition, government regulation and technology advances having considerable effect on what is being offered and for how much. When in 2001 a small local carrier MetroPCS started offering service in a very few select markets, not too many people cared. In 9 years not only MetroPCS became a force to reckon with as it expended to a lot of the largest US markets, but its business model of charging a fixed price for unlimited number of minutes without tying customers to a contract revolutionized the industry and put the big national carriers on defensive.

The government is playing its role too. The taxes and charges it levies on cellular carriers are ultimately paid by us, the consumers. Here we see an interesting way of passing these expenses along many carriers selected: for example, the Federal Universal Service Fund (FUSF or USF) was designed to bring modern infrastructure to rural areas, social projects like schools and hospitals, services for low income consumers. A very noble goal indeed and the federal government decided the wireless carriers are some of the entities who have to pay it. Well, if you are an AT&T, Sprint or Verizon customer you are paying a 14.1% surcharge on top of your monthly plan fee to reimburse your cellular service provider. T-Mobile customers pay 2.5%, we can only assume that the company chooses to pay the rest out of its pocket, a very wise move on the part of its management - as you will be able to see below, this is one of the leading reasons why T-Mobile is the value leader among the national carriers. The above mentioned MetroPCS however includes all of the federal, state and local fees and taxes into the plans costs and thus makes customer understanding of the total service cost as transparent as possible.

Last, but not least, the technology. A few years ago when Verizon map of 3G coverage was no different from AT&T map of 3G coverage because there were no 3G networks in the US period, the usage of data was so miniscule (and expensive) there was not much to talk about. The landscape changed drastically in a short time – not only every national US carrier now boasts of a 3G network, some forays into the 4G networks are already made by Sprint. The data flows are growing by leaps and bounds and so are the amounts made by the service providers on it. In fact, December of 2009 – January of 2010 are the first time in history when US carriers stopped caring about the voice traffic costs all together, when a competitive war started by T-Mobile in October of 2009 with introduction of Even More Plus plans, dropped the cost of each minute significantly, making the Unlimited plans, so rare in the recent past, not just more common, but mainstream. At the same time, with a few tricks up their sleeve, carriers did not reduce the cash flow or revenue, but on contrary, increased it in many cases, thanks to data. We are not going to go into details here, but it is important to understand how the price of the plan you have went down and the amount of the bill you pay went up, so please read a great article published by Olga Kharif in Business Week on January 20, 2010.

A rather rapid depreciation of voice traffic is expressed not only in the much wider number of unlimited plans available at lower cost from all carriers now – even the low end plans with the lowest amount of minutes almost universally include unlimited mobile-to-mobile calls within the network and unlimited Nights & Weekends minutes. In fact, these previously extra cost features became so ubiquitous in the last couple of months, we did not even bother with noting them in our compatibility tables below. On contrary, we had to note when a plan does not include these features or limits Nights & Weekends by a number of minutes. Not yet it is the case with text messaging, but there are plenty of Talk & Text plans with unlimited texting to choose from. As mentioned before, data is where the US carriers are now trying to make a killing and we’ll see how exactly each one of them does it.

The carriers for this series were selected by size – we took the four National networks and added MetroPCS, the fifth largest carrier in the US, as it has a different business model and while not National, is present in many of the largest local markets in the US. As a local point of reference for all the carriers, we chose New York, NY, ZIP Code 10001 – each of the five carriers we are looking at is present there and the greater New York City area the largest wireless market in the country. We apologize for readers living in the markets where other carriers are present for not including them into this study, but you can easily use the same methodology to compare your local offerings against the competition. Please, also note that there could be some regional differences in services, fees and taxes that we may have not accounted for.

Carriers

A few words about service providers that you need to keep in mind when you read the article:

AT&T Wireless – overall the most expensive plans in every category due to surcharges the company collects. On top of 14.1% USF charge, Regulatory Cost Recovery Fee of $1.25 per line per month is charged as well as some “Other” charge between 2.5% and 8.069% of the plan cost. For the sake of this study we took the average and are adding 5.28% to the plan cost. Plans require 24 months contracts. A feature that sets carrier apart is Rollover minutes, allowing customers to keep the minutes they did not use in the previous months and use them as a cushion in case they go over the minute allocation. AT&T has three things going for it with this attitude and calling plans: marketing budget, Luke Wilson and iPhone.

MetroPCS – carrier’s plans include all government fees and taxes, so there is no BS whatsoever and for that we applaud it. Overall the value is unbeatable; no wonder millions of people are leaving national carriers to go with the new kid on the block. There are however some serious drawbacks you have to keep in mind before rushing to MetroPCS store: there is no contract, but it also means there is no phone subsidies and you’ll have to have a high cost of entry unless you are fine with the most basic phones. The company runs CDMA network, so outside equipment is not available and would not be connected to the network, thus the choice of handsets is limited, although the company invested a lot of time and effort into expending its handset offerings and is even bringing BlackBerry into the product mix. There is no international roaming either, nor can you use your phone in other countries with a local SIM card. No longer MetroPCS offers any family plans, deals like 4 lines for $100 are a thing of the recent past, but, as you will see, two unlimited everything lines for $100 is not bad either.

Sprint – network merger with NEXTEL does pay some dividends, there are Push-To-Talk offerings from other networks, but none of them as accepted or widely available as Sprint’s. In fact, considering how bad Sprint was doing in the last few years, we would not be surprised if NEXTEL customers are what have kept Sprint out of a much bigger trouble. All Sprint plans come with Direct Connect and for many people to have it is not a choice, it is a professional or business requirement. All Sprint plans come with 24 months contract.

T-Mobile USA – the smallest and most flexible US national carrier is the undisputed value leader among the Big Four. In October of 2009 it changed the structure of its plans completely, trying to compete more with MetroPCS rather than with its bigger rivals and by doing so it sparked the rate war that went on through January of 2010. Offers now include plenty of No Contract plans at a very reasonable cost, but, as with MetroPCS, keep in mind that when you choose one of these plans you will have to pay the full cost of your phone and will not be eligible for subsidized equipment upgrade. At the same time T-Mobile runs a GSM network and finding an inexpensive unlocked phone is not a problem. Finding expensive phone you like is even less of a problem; your choices are almost unlimited as long as you do not require 3G speeds: T-Mobile USA today is the only major network in the world that runs 3G on 1700 MHz frequency and the number of handsets with 1700 MHz support is limited, but slowly growing. In addition, with unlocked GSM handset you can roam almost anywhere in the world without a need to do anything or get to your destination and purchase a prepaid local SIM card to use in your own phone. Also, keep in mind that even if you are an existing T-Mobile customer, switching to the new no contract plan will cost you $35 per line activation fee.

Verizon Wireless – the second largest and the second most expensive US carrier has a very large network, including the largest 3G coverage in the US, just turn on your TV. Any channel, any time you will be reminded of it. The plans are flexible contract wise – you can choose to buy a phone without a subsidy and pay month-to-month or sign a 12 months, or a 24 months contract, with the amount of subsidy higher for the longer one. For example, the popular Motorola Droid will cost you $199.99 when you sign up for 24 months, $269.99 for 12 months and $559.99 when you choose not to be under a contract. Because Verizon runs CDMA network you handset choice is limited to what network has to offer.

How to Read the Compatibility Tables

We tried to make the Tables as simple as possible. First, we took all the plans offered by all of the five carriers included into the study and split them into groups according to cost per month. We thought the most important point in real life is how much the consumer is paying at the end and not the number advertised on TV, so we calculated the real cost of each plan: to the amount of the plan we added all the fees and surcharges you are paying to your wireless provider that are not in fact local, state or federal taxes. With the family plans it is important to remember that many of these surcharges are charged per line. At the end, no matter how carrier calls them, this is money out of our pockets and the only thing that matters. Of course, the actual taxes would bring the cost of each plan higher still (the only way to avoid these is not to use a mobile phone at all and if this is your choice stop wasting your time and reading this immediately), but they are different from state to state, so you’ll have to calculate them on your own or call you provider for information.

The plans are split into $10 segments to make it easier to understand. Once we went to $230 per month plans we stopped – there is a very limited number of people who want to pay AT&T $319.99 for 6,000 minutes a month just because they can call Canada, there are other and cheaper ways of doing it. We can also report that gone the way of the Dodo are plans under $49.99, therefore we are starting with the plans $60 or lower.

In the First column you see the name of the carrier and the plan. The Second column gives you the nominal cost of the plan advertized by the service provider, the actual out of the pocket cost of the plan before taxes and without any additional features and options, and, finally, the length of the contract you are supposed to sign. The number of minutes included in the calling plan and the cost of each minute over the limit is located in column Three. Columns Four and Five will tell you how many Text Messages and how much Data is included into the, column Six will provide you with information on how much per month will you have to pay to add more lines to the included two and finally, column Seven will inform you what is unusual about this particular plan, whether it is the limited number of minutes for Nights & Weekends or some additional service not provided by anybody else.

As mentioned before, unless stated otherwise all plans include unlimited Nights & Weekends (N&W) and unlimited Mobile-to-Mobile calling within the network.

We make our observations based on objective data, not your personal needs. If you run 10 employees with NEXTEL phones you will not need T-Mobile no matter what it has to offer and if your whole family and most of your friends are on AT&T, changing only yourself to Verizon may cost both you and them considerably even if Verizon is $10 a month cheaper, so read carefully, but apply our recommendations keeping in mind your own needs and situation.

Hope this made it simple, so let’s start.

Plans $60 or less

This is easy: the only carrier to have any plan in this price range is T-Mobile.

Plans $61 to $70

The difficult choice here is between T-Mobile with a contract and subsidized handset with 750 minutes, and twice as many minutes without a contract.

Plans $71 to $80

Finally another carrier joins the race for our money – AT&T offers 500 minutes vs. T-Mobile’s offer of 750 minutes with unlimited texting and no contract.

Plans $81 to $90

At last we see all four of the national providers in action. While AT&T, Sprint and Verizon offer 700 minutes, T-Mobile for the same money gives you 1,500 minutes. AT&T throws in the Rollover and Sprint Direct Connect. T-Mobile also adds a couple of even less expensive no contract plans, including the lowest priced unlimited talk family plan in the USA.

Plans $91 to $100

Easy to choose, easy to write about – nobody has anything in this price range.

Plans $101 to $110

Sprint is MIA and T-Mobile yet again is the value leader with the cheapest unlimited contract family plan. AT&T in comparison has an expensive proposal and a very expensive one with no additional charge Canada calls and roaming. Verizon does not play games with Canadian options in family plans, so it matches AT&T and then adds 10 favorite numbers to call for free.

Plans $111 to $120

Sprint almost matches what AT&T and Verizon had to offer in the previous price bracket (it has 100 minutes more and Direct Connect), T-Mobile has the least expensive unlimited text and data plan and a couple of other plans, one of which is considerably better than the similarly priced Sprint.

Plans $121 to $130

Only T-Mobile is present here again with a very decent unlimited text and data plan.

Plans $131 to $140

Sprint and T-Mobile are taking a break, while AT&T and Verizon go at it with two plans each. AT&T Nation Family 2100 almost matches Verizon’s Nationwide Family SharePlan 2000, but is almost $18 more expensive. Verizon becomes the second lowest price provider of unlimited talk plan.

Plans $141 to $150

AT&T takes the third least expensive unlimited talk plan place (or is it the second most expensive?) and T-Mobile reaches its peak with no contract unlimited talk, text and data plan for $145.91. No better price for such an all-u-can-eat wireless service buffet exists today among the national carriers.

Plans $151 to $160

AT&T keeps on giving its expensive Canadian plans and Sprint offers unlimited texting and data for the first time.

Plans $161 to $170

Nothing here.

Plans $171 to $180

Sprint is ready to part with 3,000 of it valuable minutes and unlimited messages, while Verizon gives us unlimited talk and text for a couple dollars less.

Plans $181 to $190

Sprint generously adds unlimited data to its 3,000 minute plan.

Plans $191 to $200

AT&T gives whopping 3,000 minutes to call the US and Canada.

Plans $201 to $210

Nothing.

Plans $211 to $220

Nada.

Plans $221 to $230

And finally, the moment we were waiting for (drum roll): Sprint’s offer of unlimited talk, text and data.

Conclusion

There could be great many factors that will define the carrier of choice for each person, from equipment availability to the reception in customer’s house, but leaving all the particulars aside, today T-Mobile offers by far the best value on the market. If you are not afraid of buying your equipment from a third party, you will have a phone you like and a very compelling voice, text and data plans. The main weakness of the network is the weird 3G frequency, limiting the choices available and the cost of entry with unsubsidized phones. Adding more lines is often also least expensive with T-Mobile.

Verizon is the second best value in family plans, although it is considerably more expensive than T-Mobile. The company did its homework and knows what it has to offer.

AT&T would be the most expensive again, had it not been for ridiculous cost of Sprint plans. There are price gaps as big as almost $50 between its plans and text and data are only available as options (for example unlimited messaging for a family plan is $30 a month).

Verizon let go of the expensive and limited market Canadian plans for its Family offerings, but AT&T stays the course. There are more plans the company has, going up in price as far as $319.99, but we will leave these remaining AT&T Canada plans alone. The value of all these offers is highly questionable and the target audience relatively small; why AT&T has as many as six expensive plans is a mystery, but maybe we do not know much.

Sprint clearly does not need family business. The plans are very expensive, not able to compete even with AT&T. In case you wonder, unlimited talk, text and data plan from Sprint costs a whopping $75.24 a month more than a similar offer from T-Mobile. Yes, T-Mobile does not have Direct Connect and you’d have to pay full price for the phone, but over 24 months duration of Sprint contract it is $1,805.76 difference. This is a lot of dough; you can buy some very nice phones with it and still have some money left for ice cream. The cost gaps between Sprint plans are big, up to $45. Unless you must have Direct Connect there is really nothing to look at on any price level.

We did not review MetroPCS here as the company has no family plans, but to compare two individual plans with all the unlimited talk, text, data, etc you can chew including all the taxes would set you back $100. This is cheap. Very cheap. As we mentioned in the Individual plans article however, the choice of phones is poor and they are not free.

As for the overall market, we feel that the price war is far from over and before the end of the year we may see more price reductions from everybody, specifically on data. This will in turn have an interesting effect on your home internet provider, just like reductions in cellular voice traffic cost made a huge impact on your home phone company. Don’t you just love to live in a technology era?

In the meantime, we will be observing the new developments, analyze them and bring you quarterly updates, hoping our work will help you to choose the carrier and plan fitting your needs and budget the best.

* Including all the fees and surcharges added by the carriers to the monthly bill. Calculations are made at maximum amounts where possible.
** Various terms of contract available, including Month-to-Month. The cost of equipment is adjusted accordingly
*** Data sharing for additional lines is not included, but available separately for $25/mo for smartphones or $10/mo for other phones

Michael Savuskan ([email protected])
Published — 28 January 2010

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