Choosing a New Wireless Plan the Smart Way

By Jackie Dove

Finally off the family plan? Here’s what you need to know to make a smart decision on a new wireless plan.

So you're ready to strike out on your own — your own wireless cell phone plan, that is. It's not as easy as it sounds.

Once upon a time, the process was straightforward: Most people who bought a smartphone were automatically funneled into two-year plans offered by the vendor's preferred carriers. You could opt to keep that plan for as long as you wanted, even if you upgraded or replaced handsets.

Today, there are myriad options for what is arguably your life's most critical communications pipeline. The four major U.S. carriers — AT&T, Sprint, T-Mobile, and Verizon Wireless — all have revamped their pricing schemes. Phone makers such as Google, Motorola, and Apple routinely offer unlocked and no-contract handsets. You can even score some good deals from a plethora of smaller carriers offering low-cost service.

With choices comes complexity, but the most important elements you need to consider when choosing a wireless plan remain price, coverage, and network speed. Here we look at what you need to know to choose the right wireless plan.

What kind of phone do you need?

In our humble opinion, smartphones (like Apple's iPhone or the Samsung Galaxy Edge 6+), are flat out cool. But not everyone needs one.

If you can get away with a good, old-fashioned cell phone fully equipped with voice and text capabilities — without fancy internet features and tons of apps — then you can buy a basic phone (typically called a feature phone). Not needing the data plan could cut your phone bill in half.

Does any phone work on any carrier?

Not entirely. It helps to know that there are two major cellular phone technologies: CDMA (Code Division Multiple Access) and GSM (Global System for Mobiles). Even if you have no idea what those abbreviations mean, there's a super simple way to tell them apart: One uses a SIM card and the other does not. And no, these systems are not compatible.

In the U.S., Sprint and Verizon use CDMA, which does not require a SIM card. AT&T and T-Mobile (along with most of the rest of the world) use GSM, and operates with SIM cards.

The difference in these technologies comes into play if you want to switch networks for your current phone. Any new carrier you choose must be compatible with one or the other.

SIM cards

The Big Four

Each of the four major cell phone carriers in the U.S. has a variety of single line plans to choose from. If you live and work a large urban center, you have a choice of carriers: nearly all offer ample coverage of metropolitan areas. Rural areas typically have sparser coverage and fewer choices. So be sure to check your maps.

While some people hold onto grandfathered plans, the brave new world of cell phone pricing has all but eliminated the tyranny of the two-year contract. T-Mobile started its "uncarrier" initiative a couple of years ago, while Sprint, Verizon, and finally AT&T followed that lead. Now, you can opt to pay the hefty full price for a phone upfront or consider new time-based installment and upgrade options. In exchange, you get more freedom and flexibility to choose the phone and plan that best suits your needs.

  • T-Mobile's Simple Choice plans include unlimited calling to and from the U.S. to any mobile or landline number, including Mexico and Canada. Line prices start at $50 per month with unlimited talk, text, and 2GB of data at 4G LTE speeds. More high-speed data costs more.
  • AT&T's no-contract plans for smartphones features AT&T Next, which gives you the flexibility to choose a 12-, 18-, or 24-month payment or trade-in period for the latest model, such as an iPhone 6s.
  • Verizon has overhauled its plans in favor of simplified options ranging from Small to Extra Extra Large — 1GB to 18GB — for prices ranging from $30 to $100 per month, including unlimited talk and text. The two-year contract is history as the carrier only sells unsubsidized phones and no-contract plans.

Pick your plan size.

MVNOs give you even more options

Those are the big guns, but there are smaller and less expensive networks that work with the major carriers. MVNOs (which stands for Mobile Virtual Network Operators) do not have their own cell phone towers, but instead lease them from the major carriers and offer no-contract services that are roughly comparable but at a lower price. Most of the time, the parent network's phone will be compatible with the MVNO's service. But double-check before committing yourself.

Cricket Mobile

For example, Boost Mobile Monthly Unlimited Plans with Growing Data operates on the Sprint network and gives users 500MB of extra high-speed data with every three on-time payments, up to a max of 3GB. All plans include unlimited talk, text and data, starting at $35/month for 2GB at 4G LTE. You can find other Sprint sub-brands here.

Then there's Cricket, which operates on the AT&T network and delivers discount service with prices ranging from $35-55/month depending on data usage. See other AT&T sub-brands here.

GoSmartMobile works with the T-Mobile network and has no-contract wireless plans range in price from $25-$55/month starting with unlimited talk and text and unlimited Facebook at 4G speeds, and vary according to data plans. See other T-Mobile sub-brands here.

Finally, Verizon hosts Total Wireless, a brand run by TracFone Wireless. Its no-contract offer includes unlimited talk and text, and 2.5GB of data for $35/month. You can find other Verizon sub-brands here.

What do you really use?

To determine what kind of plan you need, check out what you've been doing so far. If you're like most people, your data use is growing. According to a report by industry analyst Chetan Sharma, U.S. cell customers averaged some 2.5GB of cellular data per month in the first quarter of 2015 vs. 2GB per month at the end of 2014. Another study by Cisco anticipates that customers in North America will consume 11GB of data per month by 2019.

Check your own usage patterns.

To determine which plan to consider, first look up your phone records to see how much data you used on average per month over the last year. Then calculate that cost over two years. The resulting number may point you in the right direction, assuming prices and your habits hold steady. Then, check each carrier’s coverage map to determine whether a network's geographical reach is powerful enough for your home, office, and other places you routinely travel.

Comparison of cell tower locations

A nationwide coverage map by Open Signal gives you a graphical comparison of the signal strength for major carriers in a handy interactive map.

Comparison of geographical coverage

Location determines choices. Residents of New York City or the San Francisco Bay Area metropolitan areas can shop around. Not so much, those who reside in rural Mansfield, PA.

Sprint coverage

Locks, contracts, and top ups

A locked phone ensures that the device can't be used with any other carrier's network (until the carrier unlocks it). Only unlocked phones can be transferred to a different carrier. The advantage of an unlocked phone is that you can choose a plan that best suits your needs and switch if you are not happy. Before a carrier will unlock your phone, you must cover all payments. If the phone is out of contract or paid off, your carrier is legally required to unlock it -- just call their customer service number.

Unlocked phones let you use any AT&T or T-Mobile SIM card, as well as various prepaid international cards, that help you save while you're traveling. Just swap out the SIM cards when you’re ready to change wireless providers.

Remember to verify the specs of your unlocked phone to make sure it’s compatible with the wireless frequency of the country you’re visiting.

Contract-free phones aren’t subsidized, which means you have to pay the full price for the phone upfront or via an installment plan. When you bought phones under contract, the cost of the phone was subsidized and amortized throughout the life of the contract with no price break the longer you stayed with the plan.

Cost, benefit, device analysis

If you are not eligible for an upgrade yet, but need a new phone, or if you want to switch to a cheaper monthly plan, consider a no-contract phone.

Whistleout comparison of cell phone plans

Note that carriers can and do restrict which smartphone models are available without a contract: You may not be able to get the exact phone you want, depending on the carrier you choose. You can bring your own device (BYOD) to a no-contract plan in some instances, but it has to be compatible with their network.

Pre-paid phones differ from unlocked and no-contract phones in that, absent a monthly bill, you must periodically top up your account, paying for minutes used during a specified period of time until they expire. Some prepaid cell phones allow the user to pay as they go, billing only for minutes used, plus a monthly service fee.

The bottom line

These days, it pays to shop around for the best cell phone plan. But do your homework, or you'll be quickly overwhelmed. However, if you start the process with a basic idea of the kind of phone you want, where you will use it, and the level of data you need, there's a better chance that you will emerge with the right price and flexibility.

While you're doing price comparisons, be sure to have a look at the MyRatePlan and WhistleOut comparison charts. And remember, this is a dynamic industry as companies jockey for position with old and new customers. Keep your eyes peeled for new developments on a daily basis.