Verizon’s New Prepaid Plans: No Great Savings Here

Verizon Wireless on Thursday unveiled new prepaid data plans for some multimedia and 3G smart phones, including several BlackBerry and Droid handsets. The offerings include an unlimited data package for $30 per month; and a $10 plan with a stingy 25MB monthly cap (with a 20-cents-per-megabyte overage fee).



Prepaid wireless plans are handy for customers with malodorous credit, or for those who simply don't want to be tied down to a long-term contract. Carriers charge prepaid customers more for cell phones. For instance, a Verizon Wireless customer who signs a 2-year deal pays $200 for a Droid X, whereas the prepaid user pays nearly twice as much ($395).

While carriers subsidize phones for their contract customers, they recover the discount over the life of the plan. But if that's the case, shouldn't prepaid customers catch a break on monthly charges?

I configured the least expensive monthly plan for Verizon customers who buy a Droid Xand who want unlimited data. (If you're getting a powerful Droid X--more a wireless mobile computer than a phone--Verizon's $10 per month 25MB data plan is a joke.) As the chart below indicates, not only do prepaid users pay nearly $200 more for their phone, but they also pay $5 more per month in fees.

Verizon's Droid X plans: Contract vs. Prepaid



Again, if the phone subsidy is built into the cost of the two-year contract, where's the service discount for no-contract customers who pay twice the subsidized rate for their phones? Not only is there no discount here, but prepaid users actually pay a little more per month.

The moral here? You'll pay a penalty for prepaid.