Good news for consumers: T-Mobile's Uncarrier is moving the needle

The wireless battle today is being fought among families, as major operators slash pricing. This is good news for consumers -- but watch out for the small print. CNET's Ask Maggie explains.

The deals on wireless service keep getting better, thanks to T-Mobile's Uncarrier strategy.

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The smallest of the four major wireless carriers in the US, which last week unveiled a new promotional plan offering a family of four 10 gigabytes of data for $100 a month, has had an effect on the market. In fact, it seems to be the only thing pushing giant rivals, AT&T and Verizon Wireless, to revise their pricing.

I wouldn't go so far as to say that wireless service has hit bargain basement pricing, but it's definitely an improvement. And families, in particular, are reaping the benefits.

New pricing schemes started showing up last year as a result of no-contract pricing. In February, AT&T responded to T-Mobile with a much-publicized $160 a month 10GB family offer. That same month, Verizon, the most expensive wireless operator in the market, revised its offering, giving subscribers more data for their money. It also quietly tweaked its family offer to match AT&T.

Sprint introduced its Framily friends and family calling plan in January, and it's testing out different discounted offers. With a new CEO starting Monday, consumers should look for even more discounts from the struggling carrier.

The major carriers see family plans as a huge part of their business. And as more parents add their children and their own parents to their wireless plans, the need to keep pricing affordable is front and center.

Still, figuring out which plan is best for your own family isn't easy, especially when there is the fine print to consider. In this Ask Maggie, I compare the plans from the four major carriers and offer some advice to a Verizon customer looking to switch to T-Mobile.

Should I dump Verizon for T-Mobile?

Dear Maggie,

I'm hoping you can help with some further insight on whether switching to T-Mobile is a good idea.

I live in Omaha, NE and have a family plan on Verizon with data sharing. We currently have three iPhones on the plan, and I want to add my son as a fourth line. However, I'm already spending more than $210 a month with the three lines. If I add him on the plan it will clear $260 per month or more depending on how much data we share.

The Verizon Edge service with their new family plan is $160 per month for 4 lines and 10GB of data. That seems like a good deal, but I've heard they won't allow you to bring your device and still get the discounted Edge pricing. Meanwhile, AT&T does allow you to use a phone you already own and get a discount on service without buying a new phone. At any rate, it looks like with Verizon I am stuck paying either way.

My Verizon service is good when my wife and I travel, but it actually isn't so great at my house. The T-Mobile map shows better service at my house than Verizon does in Omaha.

It looks like T-Mobile is offering a plan for four people that is $100 a month. And they'll also pay early termination fees for any of us still on contract, which could be used to offset the cost of buying new iPhones for T-Mobile.

My question is do you think it's worth it to switch from Verizon to T-Mobile? I just don't know if T-Mobile will work for my family or not, but I am sick of paying Verizon for what I believe to be subpar service where I use it most, my house. Please help.

Thanks,

Josh in Omaha

Dear Josh in Omaha,

I wrote an Ask Maggie column in February highlighting wireless plans from all the major carriers. But since then there have been some big changes to carrier data plans, most notably from Verizon Wireless and T-Mobile.

Here's an updated chart comparing pricing among the four nationwide wireless operators.

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A comparison of the four major carriers' family plans in August 2014. CNET

Verizon's tweaked plan

In order to answer your question, let's discuss Verizon's plans first, since some of the information in your question isn't correct.

When Big Red revised its data plans early in 2014, the company bumped up the amount of data it offered in just about all tiers of service. It also tweaked its pricing for customers who subscribed to its early upgrade program. In February, when I originally wrote about the changes, the company was not offering customers who had already paid off their smartphones a discount on their wireless service. This differed from AT&T and T-Mobile which each offer wireless subscribers a discount if they bring their own device to the network.

The good news for you and other Verizon customers is that Verizon has changed that policy. Both customers who are subscribed to the early upgrade plan and those who bring their own fully paid off devices to the network get a discount.

Before I explain what that discount is, you have to understand how Verizon prices its service. As I've explained in earlier columns Verizon (and AT&T) sell buckets of data at different prices that can be shared among several users or devices owned by the same subscriber. It also includes unlimited voice and text messaging. Then the company charges for each device that connects to that bucket of data. For example, smartphones on a typical two-year contract are charged $40 per device.

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Verizon offers its discount on the device connections. So if you are subscribed to the Edge early upgrade plan, which allows you to pay off your device over 20 months, the cost of your service is $30 per smartphone if you're subscribed to an 8GB data plan or less. If you have a 10GB plan or higher, the discounted smartphone price is $15 per device.

What has changed since I last wrote about these plans is that Verizon is now allowing its customers to bring their own devices to the network and to reap the same device connection discounts as customers signed up for the Edge program.

What this means for you is that you can continue to use your existing Verizon iPhones and sign up for the 10GB share plan and you can reduce the cost of your monthly service by $100 a month. It will cost you the same as it would if you were signed up for the same exact plan on AT&T.

This is good news for you if you decide that T-Mobile's service won't work well for you. Also, you can kind of mix and match some of these plans. For instance, if some family members want a new iPhone, you can buy them a new iPhone and sign up for Edge program. You'd have to pay $32.49 per month for 20 months to pay off that device. And after that, the cost of the service would be reduced each month by that amount.

Meanwhile, family members who already own their phones get the discount.

What you cannot do is get the discount if the current Verizon phones you have are still under a two-year contract. You also cannot mix and match plans if some phones on your family plan are under a two-year contract and some are already paid for. In this circumstance, you will have to pay the full price for each device connected to the data plan.

T-Mobile challenges AT&T and Verizon

Now let's talk about T-Mobile. Last week, the company announced a new promotion that comes in at $60 less than Verizon or AT&T per month. Its new Simple Choice plan with four lines costs $100, and each line gets 2.5GB of data. This more than doubles the amount of data you can get from T-Mobile for the $100 a month price tag.

But before you get too excited, you must understand there are a couple of catches. First of all, this is only a promotion. T-Mobile says it will only offer the service through September. After that, the deal is likely not to be available. Also, the amount of data you get reverts back to 1GB by the end of 2015 (you'll have to pay up to maintain the same amount of data).

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T-Mobile CEO John Legere says T-Mobile will "un-leash" customers from the cost and complexity of wireless plans. INSIDER IMAGES/Gary He for T-Mobile

The other thing to keep in mind is that unlike AT&T and Verizon, T-Mobile's Simple Choice plan is not a shared data plan. Each of the four lines on the plan are allocated 2.5GB for the month. This differs from AT&T and Verizon's plans, which allow all devices on a plan to share a pool of data. This means that on an AT&T or Verizon plan, one user could use 8GB for the month, while the other three people on the plan would split the remaining 2GB of data. On T-Mobile's plan, each person only gets 2.5GB. If someone exceeds this allotment, there are no overage charges. Instead, service is slowed until the end of the billing cycle.

As you noted in your question, if you move to T-Mobile you will have to either buy new phones from T-Mobile or bring phones that are compatible with the network. Depending on which models of Verizon iPhones you already own, you may be able to use them on T-Mobile's network. All Verizon 4G LTE phones come unlocked out of the box. (This includes the iPhone 5 and iPhone 5S. The iPhone 4 and iPhone 4S do not have 4G LTE and therefore do not come unlocked.)

Verizon's 4G LTE smartphones also include GSM chips, which make them compatible with AT&T and T-Mobile networks. That said, the phones will likely not get the highest 4G LTE speeds available. In some cases, they may only get 2.5G speeds. So it is probably best to buy new devices if you want the best data experience on T-Mobile's network.

You are also correct that T-Mobile will pay up to $300 for every phone that is on a contract at Verizon if you switch to the Simple Choice Plan. And you can use that money toward a new phone on T-Mobile.

The Bottom Line: What should you do?

As I mentioned above, if everyone in your family does not have a contract with Verizon, you can save $100 a month on service just by signing up for a share plan. But even with this discount, T-Mobile's Simple Choice plan is another $60 a month less expensive than Verizon's offer. In total you could save $960 over the next 16 months, which is how long you will be able to get the $100 month service from T-Mobile. If you aren't eligible for the discounts on Verizon, you'll save $2560 over 16 months.

The only thing you need to consider in all of this is how much buying new devices will cost you. Also, remember that you can buy used smartphones or less expensive unlocked Android phones, such as the Moto X or Moto G or even the Nexus devices. This could also help reduce your overall cost ownership.

Based on price alone, it seems like you could come out ahead by switching to T-Mobile. But before you run out and cancel your Verizon service, you should check out the T-Mobile service. Even though the coverage map indicates that T-Mobile has service in your area, you should test it yourself. So I would definitely recommend that you contact T-Mobile to test drive an iPhone 5S for seven days. The program is free, and they send the phone right to your home. That really is the best way to know if the service will work for you without going through the hassle of dumping your Verizon service and signing up for T-Mobile.

If you find T-Mobile's service to be better than Verizon's where you live and work, I say go for it. But if T-Mobile's service is worse than Verizon's service, then it's not worth the switch. The most important thing is to have a service that works. No matter how big T-Mobile's discount over Verizon may be, it doesn't mean a thing if you can't make a phone call or connect to the Net.

I hope this advice was helpful. Good luck!

 

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