Cell phones: Information, please
BOSTON — Sorting through the choices that come with cellular phones and calling plans can seem a bit overwhelming.
You've heard the options:
Analog or digital?
Contract or prepaid?
Free minutes or lower fees?
Unless you're hip to the latest high-tech gadgetry, the shopping experience can be downright frustrating.
Amy Fahmy, president of the Gardener's Edge in Durham, N.C., spent three weeks researching cellular telephones for her three-person business last March.
"I had to keep calling the [service-providers] back, because every time I talked to somebody, I learned something new and thought I should have asked the last company that," she says. "I probably called each company three times.... And in the end, I still didn't understand."
Finally Ms. Fahmy settled on a digital calling plan with Bell South because it advertised free incoming calls. (Only to find out later that the offer only applied to the first 100 minutes of usage each month.)
Yet confusion over cell-phone plans hasn't kept people from signing up.
The FCC estimates about 70 million people in the US use cellular telephones today, up from an estimated 64 million in February this year. That's about 1 million new customers every month.
Subscribers to mobile-telephone service are expected to double over the next four years, according to a study published last month by the Yankee Group, a management consulting company in Boston that focuses on technology.
The rise is a response to a 60 percent drop in service rates in the past four years. In some cases, today's cell-phone service costs no more than old-fashioned land-line service.
When choosing a cellular service plan, "the big issue is lifestyle," says David Berndt, assistant director of the Yankee Group's wireless division. You have to have an idea how much you plan to use the phone and where, to choose between paying more per month and less for use and vice versa.
The most basic choice cellular-phone subscribers face is between analog and digital technology. The advantages of analog are low monthly fees (as little as $9.95) and nearly universal coverage, says Mr. Berndt.
Analog phones can be used almost anywhere. Many analog plans also include the phone. These plans work well for people who use their phone only for emergencies, because the low monthly fees offset higher usage charges. Even if you use the phone occasionally while traveling, you may come out ahead.
Once people buy cellular phones, however, "it's really difficult not to use them at least occasionally," says Mark Snowden, a technology analyst at the Gartner Group. "That's exactly what the network providers are counting on."
Once people begin using the phone more, they may want to go digital.
Digital plans cost $50 a month and up, and include 100 to 1,000 minutes. Additional minutes cost as little as 25 cents apiece. "Digital is much cheaper to provide, so the companies are really pushing new users in that direction," says Mr. Snowden.
Companies like AT&T offer plans like Digital One Rate that offers 600 minutes a month free, with no roaming or long-distance charges ever -for $90 a month.
Such plans are beginning to convert students and other frequent travelers from land lines. "If you're on the go all the time, wireless is the best deal out there," says Berndt.
Digital services advertise clearer signals and can carry data such as e-mail and caller ID; some even allow you to surf the Web from your telephone.
Some digital plans don't charge you for the first minute of incoming calls, so you don't pay when somebody dials a wrong number. The FCC is taking that concept a step further with new "calling party pays" standards. This program has helped mobile phones spread in Europe by encouraging people to leave their phones on to accept incoming calls.
Under the plan, if somebody dials your cellular number, they get a message that they will be charged for your air time.
High-end digital plans that provide lots of free minutes, though, may circumvent the need for this service.
One drawback that comes with digital service, Berndt warns, is that the signal breaks up in many rural areas and even some suburbs. Analog phones can work in 95 percent of the continental US.
Still, the Yankee group estimates that in 2-1/2 years, digital coverage will equal that of analog. Analog service will be around for another 6 to 10 years, the experts predict.
Another confusing step in choosing a calling plan is balancing the monthly fee against the number of free minutes included and time-of-day restrictions.
Plans with no monthly fee, available with prepaid calling cards, offer two advantages: There's no contract, and no early termination fee.
The disadvantages: You typically pay full retail price for a phone, airtime and minutes are expensive (from 50 cents per minute off-peak to $2 peak time), and steep "roaming" charges - those per-minute fees for using your phone on another provider's network when you're far from home.
Digital and analog prepaid plans are popular with students, customers who can't get credit, and those who just want a phone for emergencies. But many no-monthly-fee plans require a minimum usage to keep your phone number -around 30 minutes per month.
Plans with monthly fees require a credit check, and usually a one- or two-year contract - for anywhere from $10 a month to more than $100. Many of these plans offer a basic phone for free, with heavily subsidized prices on more capable equipment (see story, previous page). But the contracts levy big early-termination fees to ensure you pay the provider back for the phone.
Most offer a few minutes of free off-peak airtime each month. Some have specials with free nights and weekends for the duration of the contract.
But watch out for the hours: Most providers don't go down to evening rates until 8 p.m. So it helps to know when you make most of your calls before buying.
Berndt advises against signing a contract of more than two years, because falling rates will leave you paying too much at the end. Thinking of moving? Consider finding nationwide service.
Many digital plans pro-rate the cancellation fee. And roaming charges can add up with these plans. Figure 50 cents to $1 per minute. Or if you're willing to pay big monthly bills, you can get big "buckets" of free minutes, with no roaming, peak-time, or long-distance bothers.
The best advice is to know your calling habits, says John Makulowich, a tech expert in North Potomac, Md., who just switched plans in his own business.
If you don't talk much, pick a plan with low monthly fees and high charges for use. If you have the gift of gab, pay the big bills up front, and talk all you want.
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