Ask Maggie: On counting down to the Verizon iPhone

This week's column answers reader questions about predictions for the Verizon iPhone 5, opportunities for cheap AT&T iPhones, and using the Verizon iPhone abroad.

The long wait for the Verizon iPhone is almost over, but consumers are wondering if they should hold out a little longer for Apple's next-generation device.

Ask Maggie

Will Verizon's eventual version of the upcoming iPhone 5 work on the LTE network? Will that service be cheaper or more expensive than what Verizon is offering with the iPhone 4? These are some of the questions anxious readers are asking themselves. It's hard to predict the future, but I offer my insights and advice.

I tell another reader that I think there will be more deals for AT&T iPhones after the Verizon iPhone launches next week. And I regretfully inform another reader about the Verizon iPhone 4's limitations when used overseas.

Ask Maggie is a weekly advice column that answers readers' wireless and broadband questions. If you've got a question, please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header.

Patience is a virtue

Dear Maggie,
I'm in a bit of a pickle. I am extremely impatient. I've been waiting for the iPhone to come to Verizon Wireless since I got the first generation of the iPod touch! But I'm still in high school and my parents make me pay for my phone, since I have an after-school job. They pay $10 a month toward my phone, and I pay for any bells and whistles that are extra. So right now on my enV3, I pay $20 a month: $10 for my required data plan and $10 for texting.

I can't decide if I should get the iPhone 4 now or wait for the iPhone 5. The main reason is that I think the iPhone 5 may have LTE and 4G and whatnot. I've heard that Verizon might charge an extra fee for 4G, and because I am on a budget I don't know if it's worth it for me. The problem is that I live in the suburbs, and we may not get 4G service for a while anyway.

My other option is to settle for the iPhone 4, which is a 3G phone. The benefit to this is that I can take advantage of the unlimited data plan for $30. I know this plan is only available for a limited time. But I wonder if Verizon might offer a cheaper plan that I could get. Or what if the plans are more expensive if I wait? What do you think I should do?

Thanks,
Jeff

Dear Jeff,
I think what you're asking me is whether I think you'll get a better deal on your service plan with the current generation of the Verizon iPhone, which operates on Verizon's 3G network, or if you should wait for a later generation of the iPhone that will operate on the carrier's LTE network.

Let me start with a couple of caveats.

  1. Verizon may not get a new version of the iPhone in June.
  2. If Verizon does get a new version of the iPhone later this year, it may not work on an LTE network.

First, I don't know when Verizon will get a new version of the iPhone. Apple traditionally has released new iPhones in the summer. And it will likely offer another phone around June. But there is a chance that this phone won't be compatible with Verizon's network. So if you want the iPhone on Verizon's network, you may be waiting longer than just a few months for the so-called iPhone 5.

But let's assume the next version of the iPhone is offered on Verizon's network, as well as on AT&T and other GSM networks around the world. Who's to say that "iPhone 5" will be LTE-compatible? In fact, I'd argue that Apple will not add LTE to its iPhone for at least a year.

And the reason is that Apple has traditionally been very conservative in terms of the network technology it uses in each version of the iPhone. For example, the first iPhone operated on AT&T's 2.5G network, even though 3G was already a fairly mature technology and there were already dozens of other phones being sold with 3G chips inside them. Instead, Apple waited a year to introduce the iPhone 3G.

What's more, Apple has demonstrated that it doesn't feel compelled to drastically change the iPhone in every new version of the device. For instance, the iPhone 3GS sported the same hardware design as the iPhone 3G, but it offered improved processing capability. Though some people will tell you they noticed a huge difference in the performance of the phone, I have to admit I was underwhelmed. I had an iPhone 3G and later upgraded to an iPhone 3GS and I never really noticed the speedier processor.

So with that in mind I don't think Apple will introduce an LTE iPhone in June 2011.

But for the sake of argument, let's say Apple does release an LTE version of the iPhone for Verizon in June. Do I think it's worth waiting for this phone? And do I think the service will cost you more than what Verizon is currently charging for the iPhone 4?

It's hard to say, because I don't know what other features Apple might add to the device. Obviously, a device operating on Verizon's LTE network will be able to download data and surf the Web much faster than a device running on the 3G network. But if you don't live in an area where you can access the LTE network, then the benefit of the increased speed won't matter much to you.

It's also hard to compare the cost of owning a 3G iPhone with the cost of owning one that uses the LTE network, because Verizon hasn't yet announced service pricing for 4G handsets. I have not heard that the company is thinking of charging more for service for 4G devices. I know that Sprint Nextel does this, but my guess is that Verizon wouldn't.

If you look at how Verizon has priced the LTE service for laptops, the service is actually $10 less per month than the 3G data service. This makes sense because LTE is a more efficient network technology--so Verizon can afford to deliver the same bits over the connection but at a lower operational cost than if it were delivering the same service over a 3G connection.

I expect that as you suggested, when Verizon finally announces pricing for the LTE handsets, it will offer more tiers of service. But this may not necessarily mean you will pay more per month. In fact, according to the Web site BillShrink, most U.S. wireless operators do not need unlimited data plans . You could end up paying less per month on a tiered service plan that offers you the right amount of data for your individual needs.

Verizon reiterated its plan to move toward tiered data services after its latest quarterly conference call. It said it would keep the unlimited data plan for the iPhone for a limited period but that tiered offerings would be coming. The implication is that eventually the company will offer consumers more options. That said, Verizon also announced it has eliminated the $15 a month 150MB plan, which it announced in October. My guess is that Verizon executives haven't quite figured out what their new service plans will look like.

To answer your question more concisely, I think Verizon will offer a wider variety of service tiers for all smartphone customers in the next few months. I don't think the unlimited plan is necessarily the best plan for every customer, especially if you are on a budget. I'd suggest that you wait until June before buying a Verizon iPhone.

I know you're impatient, but I think a lot of this uncertainty will be cleared up in the next few months. And what's a couple of months when you've already waited years? But if you absolutely can't wait, you could always get the iPhone 4 now, and if something better comes out in June, you could sell your phone on eBay or trade it in for a new model. And you'll also likely be able to switch your plan in the future if Verizon comes out with something that fits your budget and your usage better.

Getting a good deal on an AT&T iPhone 4

Dear Maggie,
Do you think I will be able to find a cheaper used AT&T iPhone 4 after the February 10 release of the iPhone on Verizon?

Thanks,
Smith

Dear Smith,
I'd say there's a good chance you will be able to find a deal on the AT&T iPhone 4 after the device is available on Verizon. The main reason is that some disgruntled AT&T iPhone 4 customers may be looking to get out of their contracts so they can move to Verizon.

Exactly how much cheaper will these phones be? Well, you have to consider that anyone who has an iPhone 4 on AT&T has likely just renewed his or her two-year contract within the past six or seven months. The iPhone 4 came out in June 2010.

If an iPhone 4 subscriber signed up for a two-year contract with AT&T, he or she spent either $200 for the 16GB device or $300 for the 32GB iPhone 4. To terminate the contract, he or she will also have to pay an early termination fee. AT&T increased that fee to $325. The cost of this fee is reduced by $10 for every month of the contract. But if you assume someone is looking to make back the full $325 early termination fee plus the cost of the device, this person would likely charge you about $525 for the 16GB iPhone 4 or $625 for the 32GB version of the iPhone.

This isn't bad considering that the iPhone 4 sells for $599 for the 16GB version and $699 for the 32GB version without a contract from AT&T.

Depending on how desperate some AT&T customers are to get out of their contracts and move to Verizon Wireless, you may be able to find even better deals if sellers are willing to take a slight loss. You could check out eBay to see if people are selling their phones. But you might also want to try posting an advertisement on Craigslist to see if any desperate AT&T iPhone users are willing to sell their phones for a reasonable price. If they're fed up with dropped calls, you may be able to name your price.

Good luck!

Going abroad with the Verizon iPhone 4

Dear Maggie,
I am interested in getting the iPhone 4 from Verizon Wireless. But I have a question. Will I be able to use the iPhone 4 from Verizon in Europe to receive e-mails and browse the Web?

Thanks,
Carl

Dear Carl,
Unfortunately, Verizon's version of the iPhone 4 will not work in Europe over a cellular network. But you can check e-mail and surf the Web from a Wi-Fi hotspot.

Verizon's voice and data networks are based on a network technology called CDMA. In Europe, wireless operators built their networks using a technology called GSM.

Unless a Verizon phone has a chip inside it to support GSM networks in addition to the CDMA chip that's used for network connectivity in the U.S., it can't be used on a European carrier's network. (AT&T and T-Mobile are GSM networks, so their phones can be used in Europe and in many other parts of the world where GSM is the network technology used.)

While some people may find this to be a major limitation of Verizon's iPhone, the truth is that I advise most people with iPhones to put their phones on airplane mode while traveling so that they don't incur expensive data charges. AT&T offers special international plans that can be turned on right before a trip to help minimize the expense of using the iPhone overseas, but it's still expensive.

The reason is that the iPhone is a data intensive device. And tariffs for data roaming are very high in Europe and in other parts of the world. So when I go to Europe, unless I absolutely need access to my e-mail, I leave my phone on airplane mode and only check e-mail or surf the Web when I'm near a wireless hotspot.

I hope this helps.

 

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