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Telecom Industry push into two year contracts

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In the USA telecom industry typically tries to put you on two year contracts. Typical payment is around $50 a month ($600 a year). Minimum payment a month is around $20 or $240 a year (Wal Mart plan). If you are low volume, episodic user resist that. Also some providers are pretty unfair in what they count as minutes. There was a couple of class action lawsuits against fraud in calculating usage by major telecoms. See, for example, Verizon Wireless to Refund $90 Million in Data Fees (Phone Scoop). So you need to be very careful.

For those of us who use phone to make just a couple of calls a week,  per day or per minute plans make more sense. (assuming $2 per day of usage, $4 a week, means approximately $20 a month) This way you can cut you annual cost to $100 if you use just voice and minimum Internet browsing, instead of 300 or more with per month plan.

If you go with two year plan you need to buy an expensive phone (approximately over $350, like Galaxy S III, which AT&T sells fro $1 with two year plan)  or you will be fleeced (essentially financing other people buying expensive phones.). Look at the table below and Pantech Burst total cost per month in comparison with much more expensive iPhone 5s or Galaxy Notes 3:

Phone  Downpayment  Fairprice of the smartphone  Plan cost (Per month)  Two year plan cost  Total cost  Cost of voice and data per two years  Total Voice&data
cost per month
iPhone5s, 16G  $              199.00  $ 649.00  $       70.00  $  840.00  $ 1,039.00  $        390.00             16.25
Galaxy S III  $                  0.99  $ 389.00  $       70.00  $  840.00  $    840.99  $        451.99

18.83

Galaxy Note 3  $              299.00  $ 700.00  $       70.00  $  840.00  $ 1,139.00  $        439.00

18.29

Pantech burst  $                       -    $ 170.00  $       70.00  $  840.00  $    840.00  $        670.00

27.92

Carriers often overcharge low usage customers by a large margin and even low by carrier standards $50 per month on two year contract is a real overkill for this category ($600 a year). This is a nice contract for a real phone addict, not so much for anybody else.

There are only two decent "pay-as-you-go" plans for "low volume" cell phone users in the USA (three if you count TracFone Wireless which requires a special phone bought directly from them):