Rich Warren: Pick cellphone providers — and they'll pick your pocket

Rich Warren: Pick cellphone providers — and they'll pick your pocket

Felt a hand in your pocket recently? It's probably your cellphone provider. While putting up all those towers to provide service requires deep pockets, cellphone providers prefer to pick your pockets to keep lining the pockets of their shareholders and chief executives.

By now you've noticed that the four major providers work with a deft touch. It costs them about a 10th of a cent to send a text, but they charge you a penny. When they get that down to a 100th of a cent, they'll charge you a 10th.

That's not a bad mark-up. Local grocers would love a margin like that. A can of tuna that costs them $1.50 would cost you $15.

The new policy of allowing you to upgrade your phone every six months for an additional monthly fee basically charges you double, since cellphone providers incorporate equipment costs in the existing fees. Only T-mobile is breaking this mold by providing some degree of flexibility in choosing and paying for your phone.

Most of the world uses pre-paid mobile service. That's not as profitable to the cellular providers. Many, if not most, of us in the United States use subscription post-paid service, and we rarely use all the minutes, texts and data for which we pay. That's because if we exceed our limit the company charges an extraordinary premium on additional minutes, texts or data.

Thus, we buy more than we use to avoid that. I laud AT&T for its rollover voice minutes, which allows unused minutes to accumulate for a year. Unfortunately, as AT&T moves its subscribers to data plans, the rollover no longer applies.

Most industry pundits and consumer watchdogs suggest buying prepaid plans from the peripheral cell companies. These are either unadvertised subsidiaries of the major players or companies that buy excess capacity from the four majors.

There's no degradation in quality or less ubiquity of service, depending upon which of the major carriers supplies the prepaid carrier's service. For example, if you live in an area with weak Sprint service, choose a prepaid carrier that uses one of the other networks. You usually can determine this online or by asking knowledgeable friends.

The only drawback to prepaid plans is that they don't subsidize phones because you pay only for airtime and/or data, not equipment. That's not important if you simply want a basic phone, because those cost next to nothing.

If you want the latest smartphones, you'll pay $600 or more for an unlocked model such as an iPhone 5 or Samsung Galaxy S4. AT&T and T-mobile work on the same basic transmission system, while Verizon and Sprint use a different system. Thus, a phone that works on AT&T and T-mobile won't work on Verizon and Sprint, and vice-versa. There are a few smartphones that can be programmed to work on either system, but they're uncommon.

One advantage of owning your own unlocked phone is when you travel overseas, simply buy a prepaid SIM card from a carrier whose system works with your phone and pay the local rates. You'll find the system used by AT&T and T-mobile more common overseas.

Speaking of SIM cards, until very recently, they securely stored all the data in your phone. Now researchers determined they can be hacked, meaning someone can steal your personal data and use your phone for nefarious purposes. While this remains theoretical, it's yet another worry of the modern age.

If you can afford $100,000 for a car, the new Mercedes S-class offers built-in 3G audio streaming from the cellular network. Thus, rather than listening to the 70-year-old technology of FM radio or even the decade- old technology of your iPod, you can stream the Internet music service of your choice without using your cellphone or Internet enabled tablet.

Of course, the cost of the cellular data service is extra, but if you can afford $100K for the car, that should not impede you.

Rich Warren, who lives in the Champaign area, is a longtime reviewer of consumer electronics. He can be emailed at

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