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Major Wireless Players Enter No-contract Game

S.Z. Berg

NEW YORK (MainStreet)—Last August, Mark Walters, a consumer electronics expert at TechBargains.com, a deal aggregation website, found a deal for himself. He switched from a traditional two-year cell phone contract with AT&T to a T-Mobile prepaid, no-contract plan.

"I was paying over $75 a month after taxes on my iPhone AT&T contract, and I was living without a texting plan that would push up the cost another $20 monthly," he says.

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Walters uses his smartphone mostly for data, and never used all the monthly allotment of minutes. He switched to a T-Mobile prepaid plan at $30 a month. It has unlimited data and texting and 100 minutes of talk time.

"I essentially went from a plan with texting that cost close to a hundred dollars and locked me in for two years to a plan that was only $30 monthly, and I was free to leave," he says.

T-Mobile was listening to customer concerns about prices and long-term contracts. In March, T-Mobile made a move that could dramatically change the major wireless carrier landscape by becoming the first one to drop contracts and offer unlimited talk, text and web with no time limitations to qualify for phone upgrades. The company also debuted its 4G LTE network service in seven major metropolitan areas.

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AT&T recently joined T-Mobile in offering a no-contract option with it new Aio Wireless service. Like T-Mobile, it offers unlimited talk, text and data without a contract.

However, AT&T's new no-contract service is only being offered in Houston, Orlando and Tampa. The company plans to continue rolling out its no-contract service in other markets over the next year on its slower 4G network (versus its faster LTE network). Unlike T-Mobile, AT&T remains primarily a contract service.

Verizon CEO Lowell McAdam reportedly said that he is open to considering offering no-contract wireless service but the company currently has no further comments.

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Here's the way it works:

With T-Mobile, you can bring your own unlocked device, or choose from one of T-Mobile's smartphones: Apple iPhone 5, Samsung Galaxy S 4, BlackBerry Z10 and HTC One among others. Plans for unlimited service start at $50 a month, with service at only $30 a month for unlimited web and text and 100 minutes of talk time.

AT&T's no-contract service offers phones from Samsung, Nokia, ZTE, among others, from which to choose, or you can bring your own compatible unlocked phone. Prices for these prepaid plans vary by market and start at $35 per month. In Orlando, for example, rates start at $40 a month, $55 per month for smartphones.

If you're interested in the iPhone 5, take note that of the two, only T-Mobile has a finite price at which monthly payments end.

--Written by S.Z. Berg, author of College on the Cheap, for MainStreet

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