My TDMA ser­vice through AT&T Wire­less is num­bered. More so now since they’re upping the main­te­nance charge from $5 to $10 next month, giv­ing me an even greater incen­tive to switch plans. The rea­son I’ve been hold­ing back on upgrad­ing, despite hav­ing an ancient brick of a phone (Nokia 5165), is because even with the main­te­nance charge, my bill is $10 less than the cheap­est con­tract avail­able from AT&T. Now that the price gap is smaller, this gave me the moti­va­tion to ana­lyze my usage and com­pare rate plans.

My cur­rent plan is a grand-fathered, out-of-contract AT&T Blue plan giv­ing me 200 any­time min­utes and unlim­ited nights and week­ends. It costs me noth­ing to receive text mes­sages (which is the way it should be) and costs me $0.10 to send them. All this for $29.99, orig­i­nally. Add on the $4.99 main­te­nance fee plus taxes and fees, and my bill comes out to an aver­age of $42 monthly. It turns out that I aver­age about 160 min­utes per month, and that includes nights and week­ends. My tex­ting charges are all but non-existent. So it would seem I made a good choice. Or did I? Given my aver­age monthly usage and charges, that comes out to over $0.26/minute.

The clos­est AT&T con­tract that matches my cur­rent plan is the Nation 450. That’s more than three times the num­ber of min­utes I would end up using. Plus after taxes and fees it would be an esti­mated $59.24. And I wouldn’t even get unlim­ited nights and week­ends and they’d start charg­ing me to receive text mes­sages. If my usage stays the same the equiv­a­lent rate would be about $0.37/minute. Talk about over­pay­ing for service!

Look­ing at pre­paid plans, AT&T offers two types—Pay As You Go and Pick Your Plan. PAYG is a tra­di­tional pre­paid plan in the sense that you refill your account as needed by pur­chas­ing refill cards or directly deposit­ing funds into your account. Pick Your Plan is sort of a hybrid between a con­tract and PAYG. At the begin­ning of each month you’re charged a spe­cific amount based on the plan you picked which gives you a lim­ited num­ber of min­utes. If you use up the funds, you have the option of adding more funds to your account or wait­ing until the next month for the next sched­uled pay­ment. If you don’t use any funds, they rollover.

Pay As You Go has two rate plans. The first is the flat rate plan which I call the “pocket pay­phone” because all calls are charged at the rate of $0.25/minute. At first this looked good since I’m a low vol­ume cus­tomer, but at 160 min­utes per month, the bill would be $40. In fact, any­thing over 120 min­utes and this plan is no longer that attrac­tive. If you need a phone just for emer­gen­cies or as a backup, then this plan makes the most sense. The sec­ond PAYG rate is $0.10/minute with free mobile-to-mobile calls. About a third to half my calls are to other AT&T cus­tomers so I thought this would be a good choice. How­ever, this plan charges you a daily acti­va­tion fee of $1.00 if you use any voice fea­ture (make a call, receive a call, check voice mail, etc.). Since I use my phone on aver­age 25 days per month, any sav­ings I get from the low per-minute rate and M2M calls are pretty much wiped out. In fact, ver­sus the flat rate, I’d only save $6 per month. In order for you to save a sig­nif­i­cant amount of money using this plan, every­one you call has to be an AT&T cus­tomer that way you’re only charged the daily acti­va­tion fee.

Pick Your Plan has four rate plans start­ing at $29.99 up to $69.99. More expen­sive plans give you a bet­ter per minute rate rang­ing from $0.15/minute to $0.108/minute and add unlim­ited min­utes. Since the point is to save money the PYP 200 at $29.99 is the only one I’d con­sider. It gives me up to 200 min­utes every month. I can refill the account if I run out and any unused min­utes will rollover. Which I can use for that occa­sional text mes­sage I need to send/receive. Also one of the key dif­fer­ences between PAYG and PYP is that PYP has nation­wide roam­ing. Since I travel, it pretty much tips the scale in favor of PYP over PYAG.

To sum­ma­rize:

  • Pick an AT&T GoPhone Pay As You Go Flat Rate…

    • …if you don’t like being in a contract.

    • …if your usage is under 120 min­utes per month.

  • Pick an AT&T GoPhone Pay As You GO M2M

    • …if you don’t like being in a contract.

    • …if you pri­mar­ily call other AT&T customers.

    • …you don’t use your phone daily but use it more than 120 min­utes per month.

  • Pick an AT&T GoPhone Pick Your Plan…

    • …if you don’t like being in a contract.

    • …if you use your phone daily and more than 120 min­utes per month.

    • …if you can’t qual­ify for a con­tract because of bad credit. (The PYP 400 and PYP 650 are more expen­sive and have less fea­tures than sim­i­lar Nation plans.)

    • …if you need nation­wide roaming.

  • Pick an AT&T Nation Plan…

    • …if you don’t mind being in a contract.

    • …if you want a dis­count on a phone. (Tech­ni­cally the dis­count of the phone is fac­tored into the bill so in the long run it’s not really much of a sav­ings, unless of course you find some rebate deals that pay you back like the ones avail­able from Amazon.)

    • …if you aver­age more than 300 min­utes per month and have good credit. If you aver­age less than 300 min­utes you may be bet­ter off with a PYP 200 or PYP 300 plan.

    • …if you need nation­wide roaming.

Ama­zon offers a wide selec­tion of phones for both pre­paid and con­tract ser­vice; there are even unlocked phones. Prices are low. So low in fact, you can make money through their rebates. And there’s lit­tle risk with their 30-day return pol­icy. I had to take advan­tage of that when I ordered the wrong phone, and of course Amazon’s cus­tomer ser­vice is top-notch. Here’s a sam­pling of their offer­ings for AT&T. There are no dis­counts for the pre­paid phones but you start off with $40 of air­time. The con­tract phones are some of the cheap­est around.

My best advice is to match your usage to a plan. When going with a post­paid con­tract it’s cheaper to have extra min­utes than come-up short since over­ages are charged at $0.45/minute. When going with a pre­paid plan, buy as many min­utes as you fore­see your­self using. That way, you’ll get more min­utes for the money and the chances that they’ll expire before you use them is less.

2 Responses to “Prepaid vs. Contract: AT&T GoPhone Or Nation Plan”

  1. Linden LAN » Blog Archive » How Wireless Service Providers Make Their Money said on September 17th, 2007 at 7:08 pm:

    […] com­par­i­son of AT&T’s post-paid ver­sus pre­paid call­ing plans gave me some insight into how wire­less ser­vice providers make their money. Based on this empirical […]

  2. gophonego said on February 12th, 2009 at 9:36 pm:

    Gophone or any other pre­paid phone is the way to go in a crappy econ­omy man. You never know when you are going to be in the unem­ploy­ment line. With a con­tract phone you are screwed whether you cut back usage or not, with pre­paid you can cut back if you need to or dis­con­tinue the plan. Guess you could keep bare­bones plan for inter­view call backs…if you get any that is.