With the holiday shopping season upon us, many consumers are looking to buy new phones for themselves or as gifts — which means choosing a new plan. As unlimited phone data plans become less available, some wireless carriers are working on transitioning customers to shared talk and data plans.
This summer Verizon (VZ) and AT&T (T) unveiled new shared data plans, touted as a better value for users than traditional family shared or individual plans with added-on data packages. Shared data plans provide various amounts of communal data across multiple devices. All phones, tablets, gaming consoles, hot spots and laptops included in the plan share a bucket of data for one monthly fee — which, in theory, is meant to cut costs.
AT&T's Mobile Share and Verizon's Share Everything plans offer customers unlimited talk and text along with several levels of data for up to 10 devices. T-Mobile and Sprint also offer data shares — even unlimited data packages — but they only cover up to five devices and their coverage networks aren't as extensive as AT&T and Verizon's.
The Big Question
Still, the big question is: Are these shared data plans really cheaper? And are they better than the unlimited plans offered by Sprint (S) and T-Mobile (DTE.DE)? The answer: it's complicated (and likely made purposely so by the carriers). Whether it makes financial sense to switch to a Verizon or AT&T shared data plan depends on your data and device needs. Ultimately, you need to have a firm idea of how much data you and your family use each month.
Consumers are, so far, buying into the shared-data idea. Nearly two million AT&T subscribers signed up for mobile share plans in the first five weeks of availability, the company said in its third-quarter earnings call. And more than a third of those customers chose 10-GB data plans or higher.
Verizon is seeing similar trends. On its latest earnings call, Chief Financial Officer Fran Shammo said more customers than expected are switching from unlimited plans to the Share Everything plan — and attaching more devices. More important, to accommodate the extra devices, users are opting for higher-tiered data plans, which obviously cost more per month.
We crunched some numbers and one general rule we found was that shared-data plans may be a better deal if your family has more than four devices. Here are three different plans to help you cut through the confusion and decide if going the shared route is right for you.
- A couple: two smartphones and a tablet = three devices
- A family with two parents, a college student and a middle school student: four smartphones, 1 tablet and a mobile hotspot = six devices
- A family with two parents, two grandparents, one teenager and a child in elementary school: four smartphones, two basic cellphones, two tablets, one hotspot and one gaming console that connects to the Internet =10 total devices
This chart shows how much each family would spend on phone plans per month:
When comparing the various costs, AT&T and Verizon's shared plans are priced based on the amount of shared data in the package. But Sprint and T-Mobile's plans, along with AT&T's plan without shared data, are priced based on the amount of minutes in each package. As you can see, the first family would actually spend less with a regular family plan and data add-ons from AT&T than they would with a shared plan through AT&T or Verizon. The plan with 700 minutes would save them at least $30 or more a month, or at least $360 a year.
For the second and third families, it's cheaper to be on the unlimited talk and text plan with shared data (included), as seen in the first two columns. They would be saving at least $10 to $30 a month, or around $120 to $360 a year, depending on the number of devices and the plan chosen. The only time the family of four would pay less on a plan without shared data is if they chose AT&T's 700-minute or Sprint's 1,500-minute packages. But in doing so, they'd either have to choose between limiting themselves to less talk time or a smaller network versus having a larger network or unlimited data usage.
The Bottom Line
Without actually calculating the price difference, it's easy to assume the shared data plans are cheaper. But AT&T and Verizon's shared plans are only cheaper for those who add extra lines and increase minutes and data. The bottom line: The more data you and your family use — and the more Internet-enabled devices you use — the better off you are with a shared plan.
"It is a better value and people these days have multiple devices," consumer and money-saving expert Andrea Woroch said via e-mail. "Plus, more wireless service providers are adding more hot spots across the country giving consumers the opportunity to select WiFi hotspot instead [of] using their own wireless data use."
Woroch suggests that consumers look at their current plan and review the last six months of data usage. (If you have no idea how much data you consume in a typical month, check for "data usage" on your past few bills.) You also can find a calculator here for Verizon, and one here for AT&T, to help you determine your data usage. She warned, however, "Don't overestimate your data-use budget because the penalty for overage may actually be more affordable than if you pay for a larger data plan but use far less with the exception of a month or two using it fully." BillShrink.com, a bill-comparison web site, also offers a tool to help you compare cellphone plans.
Woroch offered another tip to save on data usage: set your phone to search for WiFi when available. "You should always set your phone to your home's wireless account too or use the laptop instead of your smartphone to surf the internet or play music from Pandora."
Even though T-Mobile and Sprint offer unlimited plans and lower-priced options, they have yet to cut into AT&T and Verizon's combined wireless market share, which is at 70%. One reason is the better network coverage offered by AT&T and Verizon. What's more, T-Mobile doesn't offer the Über-popular Apple iPhone, unless it's unlocked and you buy a T-Mobile SIM card (a workaround too inconvenient for many consumers).
With the variety of choices available in the wireless market, it's easy to get confused, so be sure to do your research before selecting a carrier and phone plan. Otherwise you may be sacrificing hundreds of dollars a year.