This post comes from Louis DeNicola at partner site Cheapism.com.
Ever sign up for a phone plan expecting to pay one thing, only to get a bill that's much higher? Or had the unfortunate experience of going over your plan's voice, text, or data limit and being hit with overage fees?
Unfortunately, a number of fees that up the cost of cellphone plans simply can't be avoided. These include taxes and surcharges that the government collects from phone companies, which then pass them on to customers.
In some localities, charges such as a federal Universal Service Fund contribution (up to 15.6%) and additional taxes from state and local governments add more than 20% to wireless bills.
Fortunately there are ways to alleviate other extra fees -- whether it's $36 to activate a new line of service, $15 for going over a data cap, or $1.99 for 411 -- without packing up and moving to another state.
Cheapism.com examined the four major carriers and created both a guide to all the different cellphone fees and fee-comparison charts where consumers can easily compare the providers. Putting plans and coverage aside and focusing only on those extra line items, we wanted to see if any provider stood out.
Our report concludes that T-Mobile is the best carrier for consumers who seek transparent pricing and don't want to worry about fees. T-Mobile doesn't charge a fee for activating or upgrading a phone, and with new plans that include unlimited voice, text, and data, customers don't need to sweat overages. The carrier also no longer requires a contract, and for existing customers still under contract, it has the lowest early termination fee (or ETF) of the big four carriers.
AT&T charges customers a fee to activate service ($36) and again to upgrade a phone ($36). The company took some flak a few months ago for adding an administrative fee of 61 cents per line, but T-Mobile is the only carrier that doesn't charge such a fee (although it does charge a higher regulatory fee than the others, which more or less levels the playing field). With most plans, AT&T's overage charge for 1 gigabyte of data is lower than Sprint's and Verizon's and its maximum early termination fee is $25 less.
Sprint matches AT&T with expensive activation and upgrade fees ($36 each) and equals Verizon with a steep maximum early termination fee of $350. It also has the highest extra charges when it comes to the small but aggravating administrative and regulatory fees (up to $2.90 per line). Still, Sprint does offer unlimited data, which means not having to worry about overages. And for customers who don't choose the unlimited plan, Sprint charges a per-megabyte rate (1.5 cents) instead of forcing customers to buy a full extra gigabyte when they go over their cap.
Verizon Wireless, which controls the largest share of the U.S. market, has slightly lower activation and upgrade fees ($35 and $30, respectively) than Sprint and AT&T but doesn't do anything to distinguish itself on the fee front. Verizon's early termination fee starts at $350, and customers who go over their data limit must pay $15 for either 500MB or 1GB of additional data, depending on their plan. Extra administrative and regulatory fees amount to $1.11 per line.
Cheapism also looked at fees associated with making calls to friends and family overseas. Each carrier offers plan upgrades for about $4 to $7 per month that reduce the per-minute cost. Some also offer unlimited international texting upgrades ($7 to $10).
Consumers packing their bags and traveling abroad should watch out for expensive international roaming rates for voice, texts, and especially data. T-Mobile, for example, charges $15 per megabyte outside the United States (except in Canada, where the rate is still an extremely high $10 per megabyte). Other carriers charge just as much, but their customers can reduce roaming charges by buying international service upgrades and packs of data in advance.
T-Mobile and AT&T customers with unlocked phones can also avoid international roaming charges altogether by finding a provider overseas and swapping a U.S. SIM card for a local one with local rates.
Verizon and Sprint use CDMA technology instead of the GSM standard popular overseas, so their customers can't do this unless they rent a phone from the carrier or have one of the new global smartphones that work on both networks.
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