Contract vs Prepaid WHAT IS THE DIFFERENCE?? This seems wrong, so wrong.

Teacher

Contract vs Prepaid WHAT IS THE DIFFERENCE?? This seems wrong, so wrong.

Okay, this confuses me....Please explain to me if i am reading this correctly, because if I am, this is PURE INSANITY (prepaid is HALF the monthly price, for the same data plan and minutes!!!)

 

AT&T contract, 2G data unlimited talk & text for $100 per month

VS

AT&T prepaid "pick your plan montly", 2G data unlimited talk & text for $60 per month!!!

 

What in the world? Is that right? Is prepaid really HALF the price, for the EXACT same amount of data, minutes, and texts, AND it runs on the same network? Why would ANYONE sign a 2 year contract if this was the case? Can someone tell me if I am missing something? WHAT BENEFITS are there to having an actual "post-paid" contract vs a prepaid plan?? Since contract rate plans are TWICE the amount, there better be at least something better about them!

 

LAST IMPORTANT QUESTION: Does AT&T "pick your plan" prepaid MONTLY plans allow you to ROAM onto other carriers towers within the U.S if you are not near an AT&T tower?? I remember when I had AT&T prepaid years ago, the major down-side to having a prepaid AT&T phone vs an AT&T contract phone was that you could NOT roam with AT&T prepaid. This made the customers who where on the contract have access to a much, much larger network as they are allowed to roam if they went outside an AT&T service area, while customers with pre-paid plans could not roam and their phone simply would not work. Is this still true? I hope so. Otherwise, there is ZERO benefit to having a contract vs a prepaid.

 

ADD: I just checked the coverage map for contract vs "prepaid MONTLY plan" and it says that the AT&T GOPHONE pick your plan DOES HAVE THE EXACT SAME ROAMING, AND EXACT SAME COVERAGE (INCLUDING EXACT SAME 4G LTE COVERAGE) AS REGULAR 2 YEAR CONTRACT CUSTOMERS GET!!!! This is a pure scam against contract customers!!!!

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Message 1 of 6

Re: Contract vs Prepaid WHAT IS THE DIFFERENCE?? This seems wrong, so wrong.

This has been the case for a while now. AT&T will only be able to roam on GSM Networks (T-Mobile mostly) and in most cases AT&T coverage overlays most of T-Mobile's coverage area. The main caveat to prepaid plans, over contract plans, is the phone pricing. With prepaid carriers, you have to pay full retail price for the phone up front ($500-600+ for the high-end phones). With contract plans, you only pay the subsidised price up front, but you are required to sign up for other services, such as data.These services were charged at a more premium rate to ensure that AT&T recovers the full cost of the device.

Another issue some people may run into is having to pay for their service up-front rather than paying at the end of their month, it's an inconvinience to some people, especially if it's the first month. As you stated, coverage is also an issue. Traditionally, prepaid plans suffered from the same fate, either a small coverage area (MetroPCS/Cricket) or the inability to roam on domestic networks. Roaming agreements have been more flexible recently, although AT&T still does not allow domestic roaming on prepaid plans. 

Quality of service is another issue that may turn off some people. In the extremely rare instance that AT&T was flooded with requests and could not handle all of them, it would process postpaid plan requests before prepaid requests. It is also possible for AT&T to throttle and/or route prepaid data through select data centres, concentrating the requests made there, and causing slower speeds. 

Finally, some people claim that customer service is more helpful with postpaid plans. I don't believe this to be true, but for what it's worth if you have a negative experience with customer service, you can always close you account and if you have an unlocked device go to one of AT&T MVNOs (like AIO wireless) or T-Mobile without having to pay an ETF or linger on unhappily until your contract terminates. 

Message 2 of 6
Teacher

Re: Contract vs Prepaid WHAT IS THE DIFFERENCE?? This seems wrong, so wrong.

Thanks for the reply, but this still seems to make little sense. Numbers speak the best, so let me simply give the numbers here then explain later.

 

Here is the exact numbers, for Contract vs Prepaid (both with 2G data plans & unlimited talk and text)

 

= $2,400 cost for 2 years of contract with 2G data + unlimited talk & text

 

VS

 

= $1,440 cost for 2 years of prepaid with 2G of data + unlimited talk & text.

 

That is $1,000 savings by having prepaid, and you get the SAME 2G of data, same unlimited talk & text!!! This is only over the course of 2 years, too! If you are a long term customer (like many are), lets say a 10 year customer, well, you'd save $5,000 if you where a long term customer of 10 years. This is crazy.

 

Now, I understand people will think that by going a contract, this allows them to pay "less up-front" and get a "discounted" phone instead of full-retail price. This is FALSE in a lot of cases. ESPECIALLY if you don't have excellent credit, then AT&T requires an average deposit of around $250. My deposit was freaking $500 bucks!!! My friend who had pre-paid of course doesn't have to pay any deposit, so he actually paid HUNDREDS less up-front than I did, for the SAME phone, plus his bill is much cheaper.

 

So comparing the cost of phones too, prepaid STILL won!!

 

  1. I paid: $199 for a so called "discounted" iPhone 4s, and am stuck in a 2 year contract.
  2. My friend paid $200 for the SAME iPhone 4s on Craigslist, and he has no contract. Not to mention he's saving a whooping $1,000 bucks by having prepaid, and he gets the SAME unlimited talk & text and the SAME 2G of data.....Does this seem right, or make any sense? 

 

Also, back to the roaming question: are you sure AT&T prepaid monthly plans cannot roam?? From their own website, it says that prepaid MONTHLY "GO-PHONE" plans CAN ROAM and have the same coverage as us contract customers, and can roam free of charge. The only ones who cannot roam are the "pay-as-you-go" customers, who pay by the minute. The "pay-as-you-go" prepaid customers are totally different than the "GoPhone" prepaid customers. Most people get the two mixed up, not realizing there is 2 different types of AT&T prepaid service. So if the GOPHONE can infact roam, and has the exact same coverage as the post-paid contract customers do.... What is the point of contract?? I thought us contract customers had more coverage, but I guess not anymore. I've checked the coverage maps one more time to make sure I was correct, and yes, the "GoPhone" coverage map is 100% the same as the "Contract coverage map", and the "GoPhone" coverage map even says "Roaming partners" on their coverage map.

 

 

Message 3 of 6

Re: Contract vs Prepaid WHAT IS THE DIFFERENCE?? This seems wrong, so wrong.

Josh,

 

Allow me to acknowledge your response in parts. I apologize in advanced for it's length. It's all a psychological tactic that has been employed for many, many years. Let me preface this by saying, people have grown used to contracts, there are millions of us who have stuck loyal to pre-paid models for years and have grown to watch them change from PAYG to unlimited monthly plans. (You can thank Cricket, Boost Mobile, MetroPCS, and Virgin Mobile USA for this transition.) There are MVNO (such as StraightTalk, H2O Wireless, etc) which have offered cheaper, unlimited plans, selling AT&T service they purchased whole-sale.

 

A bit of prepaid history, which helps explain why the psychological tactic has been effective.

I'll focus on the bigger companies, that are more widely known today. (There were many regional carriers.) About a decade ago, in the basic phone era, MetroPCS initially offered unlimited talk and text for $40 a month. Cricket, offered a similar plan, with picture messaging. Most other prepaid carriers were PAYG. Soon MetroPCS and Cricket began offering basic data services, their cheapest plans ($30) were talk and text, no MMS, no Web, No Caller ID, No Voicemail. Their most expensive plan ($45) touted those features. (Of course, back then, with post paid carriers, you weren't required to sign up for a data plan or other services, unless you had a very specialized phone.) You signed up for SMS/MMS packages and minute allowances. Soon both carriers plans evolved to where those were basic features ($35) and you could add stuff like navigation, IM, email, etc. by upgrading to a different plan or adding a pack. Coverage on both these networks was limited to the regions it was available in. Both carriers signed roaming agreements to extend coverage nationwide, but you could only sign up for service in their home regions. It wasn't until more recently when the demand for smartphones increased, that people began seeing the major potential of prepaid plans. Even in Q2 2010, one of the largest prepaid carriers (MetroPCS) did not have a 3G network. (They jumped straight into 4GLTE.) Thus, people will still associate prepaid, with inferior service automatically, and assume it's not worth looking in to. 

 

Up-Front Cost

I agree with your numbers. In the long run, over two years, prepaid plans are cheaper. (This is true for carriers which offer prepaid service, and has been true for the last few years.) Let's take this step by step. AT&T markets their post-paid options heavily. The make users aware of their GoPhone and PAYG plans, especially in areas with high amounts of prepaid users, but don't market them as heavily as post-paid. Mostly, they don't explain the plans, they just announce they're available. The vast majority of phone users are eyeing the high-end handset will refuse to pay $500-$600 for a phone, because they can obviously get the phone for a, seemingly, lower cost. They don't take time to do the math. Renewing contracts, doesn't require a new deposit, and you get the subsidized price anyway. Returning to deposits, it's money you can count on getting back at the end of the year, where as the additional $350-400 from the full-retail price, you dont. (Ever wondered why ETF are around $300?) For most people, when they sign a contract, they anticipate they will be customers for years, if not decades, so the $500 deposit, is a sound investment they'll be getting back sooner or later. 

 

Families - Up-Front Cost and Monthly Cost

Here is an important one. Millions of accounts are families. Let's say you have a family of four (average household size, two teenagers, two adults). We'll include a $500 deposit. 

Device Cost

  • Subsidized 4x$199+$500=$1296 (plus local taxes)
  • Unsubsized 4x$600=$2,400 (plus local taxes)

Monthly Cost (because it's an upfront cost for Go-Phone)

  • GoPhone Monthly 2G Plan 4x60=$240

Final Up-Front Cost

  • Postpaid = $1296 + $144 (activation fee, four lines) = $1440 (plus applicable taxes)
  • Prepaid= $2400 + $240 = $2640 (plus applicable taxes)

Device Availability 

The iPhone 4S, on Craislist, was not $200, when you paid $199 for yours. If it was, lucky him, he got one heck of a deal. If you're looking to purchase a subsidized $200 phone on contract, and take to craigslist to find the same handset, most likely, the price is still going to be close to full retail, especially if you're looking for new or close to new quality. The truth is, many people like to buy direct from the carrier. For prepaid selections, the handsets are priced lower, since it's all due upfront, but they're not as compelling. (Nearly every person I've met thinks you're limited to the prepaid selection AT&T offers. Unlocked phones, with the exception of the iPhone to use on T-Mobile, have never really caught attention in the United States until now. ) 

 

Go-Phone Roaming

Yes, allow me to retract my previous statement. AT&T allows GoPhone limited roaming. On post-paid plans, if your phone loses signal, say inside a building where T-Mobile coverage is present, you can roam on T-Mobile. On GoPhone if you area is serviced by AT&T and you lose signal, your device will say No Service. GoPhone's roaming is limited to enormous geographic areas where AT&T lacks coverage (say, the State of Nebraska.) I invite to view the coverage maps again. Alternate between Voice and GoPhone Pick your Plan, and pay attention to key areas (such as Wyoming and Nevada.). 

 

It seems wrong, but it's very right.

The truth is, yes, you're right. Prepaid plans are a better bang for your buck. Even MVNO prepaid plans are great (Straight-Talk/Tracfone/Net10/Telcel America offer handsets that use one of all four major carriers, some run on Verizon, others on Sprint, a few on AT&T, and some on T-Mobile. They even have SIMs for BYOD - their 'unlimited'-everything plans are between $40-60.). The flexibility of having no contract is also a bonus. (I went through the top 6 carriers in the course of two years, and now I have a family member on special pricing for Unlimited 4G Data, SMS/MMS, and less than 500 minutes for ~$28, using Sprint's Network.) Prepaid plans are barely becoming a threat to the major carriers because more people a finding out about their offerings. (There's a reason AT&T launched AIO Wireless.) T-Mobile US's Uncarrier initiatives, America Movil's commercials, and T-Mobile opperated MetroPCS's heavy marketing in low income areas have brought prepaid offerings to light. 

 

So consider this question. It seems as if you're barely discovering these new plans and the cost/savings they offer. Why did you consider revisiting prepaid plans? The reason is likely not applicable to post-paid customers, who are sitting comfortably with their existing service. Millions, upon millions of Americans are completly unaware of such offerings and attribute prepaid plans to inferior service, or stictly PAYG service. We're in an MVNO surge, where many prepaid carriers run on Sprint or T-Mobile, with a few on AT&T, and two or three on Verizon. Dozens of companies offering simlar rates have sprung up, almost over-night. 

Message 4 of 6
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Professor

Re: Contract vs Prepaid WHAT IS THE DIFFERENCE?? This seems wrong, so wrong.

For many people who have single lines, prepaid service will be better as far as price.  There are some who would still need postpaid service for various reasons such as they are eligible for a discount on postpaid service (there are no company discounts on prepaid) and they may need bills to submit for employer reimbursement of cell phone service costs.

 

There have been recent changes to GoPhone service that make it better than it was in the past.  iPhones are supported now and data plans have become more desirable.  If GoPhone works better for you, then switch to it.  There are some customers who need postpaid service, so it works better for them to be on postpaid.

Message 5 of 6
Tutor

Re: Contract vs Prepaid WHAT IS THE DIFFERENCE?? This seems wrong, so wrong.

Im very happy on prepaid and have never had problems. I had Verizon prepaid and it was excellent. Now Im with AT&T prepaid and its great too but.... except newer iphones (software) are having issues with texts with AT&T. It had nothing to do with being prepaid. I will never go back to a contract again. I had Sprint for 15 years and after they went down in coverage I paid $ to cancel the contract. Learned the hard way.

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