How to pick the right Apple iPhone 5 plan
Consumers who are counting down the hours until
For fans, it's not a question of whether to buy--Apple (AAPL) pre-sold an estimated 2 million iPhone 5s in the first day of availability, and the current wait estimate for new orders on Apple's site is three to four weeks.
For fans, it's not a question of whether to buy--orders for each successive Apple iPhone have topped analyst expectations, and insiders say the iPhone 5 announcement expected Wednesday will be no different.
But the iPhone market has changed substantially in the year since the 4S came on the scene, which means consumers who want one may need to make a thorough assessment of their current plan and carrier before preordering. "Last time around, the big news was Sprint got the iPhone, and that widened the possibilities, but it was still pretty much the same phone, same networks, roughly similar pricing everywhere," says Eddie Hold, a vice president for market research firm NPD Group.
This year, there are more nuances: For one thing, two prepaid carriers, Cricket and Virgin Mobile, now offer the iPhone. Cricket will get the iPhone 5 on Sept. 28; Virgin Mobile has not yet announced a U.S. release date. Virgin Mobile did not immediately respond to requests for comment.
Also, cellular data networks have grown faster in some markets, leading to more variation in speeds. And two of the biggest carriers, AT&T and Verizon, introduced family shared-data plans that could make owning any smartphone cheaper for some users, and pricier for others.
"The stakes keep getting bigger," says Kirk Parsons, senior director of wireless services for J.D. Power and Associates. "This lays it on the customer to be educated about all the components of their plan and coverage."
Here are five factors to evaluate before placing your pre-order:
Phone cost
Carriers are sticking with the starting price of $199 for a new-model 16GB iPhone 5 with a new two-year contract. But Verizon also offered consumers who still have its unlimited data plan the choice of keeping it and paying the full retail price of $649 for a new 16GB iPhone 5. (Getting the $199 price requires moving to a metered data plan.) Prepaid carriers charge more for the phone itself--Cricket has the 16GB 4S for $500, and Virgin Mobile charges $650-- and experts expect pricing for the iPhone 5 will be the same. But the often-cheaper voice, data and text plans can help consumers pay off the price difference in less than a year, Parsons says.
Network speed
The new iPhone will support 4G LTE, the fastest cellular network technology, and carriers have been talking up their 4G networks: Verizon says that it has the largest network; AT&T, that it has the fastest; and Sprint, that it's the only national carrier with both a 4G network and unlimited data plans. (Prepaid carriers Cricket and Virgin Mobile, which carry the iPhone, also have some 4G connectivity.) "It really comes down to, 'Yes, but how about where I live?'" says Hold. The 4G LTE network and other 4G technologies aren't yet available in every market, and without it, smartphones fall back on 3G. So consumers whose decision to upgrade hinges on that speed should check availability on carriers' sites. If you travel frequently, it helps to check coverage in those areas you're most likely to visit too, he says.
Call quality
While you're reviewing coverage, don't forget to check the number of bars in your area on a site like BillShrink.com or CNet, which rate connectivity by ZIP Code and carrier. But note that there's still some risk of dropped calls from glitches with the handset, or structures that block reception, says Schwark Satyavolu, a co-founder of BillShrink. Most carriers still offer trial periods of up to a month, he says, so be prepared to act fast if you're not satisfied after a switch.
Data plans
With a 4G iPhone in the mix, data charges become even more important to consider. A pitfall of 4G is that the speed entices users to do more with their phones--it is possible to watch a TV show or movie without any snags, says Parsons. "You'll have a pretty rich experience," he says, "but you're going to blow through your data plan pretty quickly." New shared-data plans from AT&T and Verizon may benefit families with multiple smartphones and tablets on one plan, in some cases offering more data and lower prices than per-line offerings. But unlimited plans from Sprint, Cricket and Virgin Mobile may be a better value for individual users and heavy data users, he says.
Early-termination fees
The cost of leaving a contract early can top $350, depending on the carrier, what kind of phone you have and how many months are left on the clock. The good news: resale rates, especially for the iPhone 4S models, can help offset the cost, Hold says. A Sprint or Verizon 16GB iPhone 4S currently sells for as much as $200 on resale site Gazelle.com; an AT&T version, up to $256.
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