Which Carrier Offers the Cheapest Wireless Plan?

By Markets Fool.com

The four major wireless carriers like to claim how great their networks are, how fabulous their prices are, and just how much they offer customers. But where should you turn when you want a bare-minimum plan -- something that's just enough for people who use their phones to make calls and send text messages without using much data?

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You could turn to off-brand carriers like FreedomPop, which offers very low-cost service -- with the major catch that it operates over WiFi whenever possible and that overages can pile up quickly when no connection is available. There are also deals offered by the various pre-paid brands like Cricket Wireless and Virgin Mobile, which are owned by or tied to AT&T , Verizon ,Sprint, andT-Mobile . But for this comparison, we'll focus on the cheapest wireless deals offered under contract by one of the big four.

In comparing the plans, we'll work under the basic assumption that all four carriers have networks that count as "good enough." Yes, Verizon has consistently ranked the highest on the twice-annual RootMetrics reports. But overall network quality has improved so much that for the purpose of this comparison, it's reasonable to assume that someone looking for a cut-rate plan would be willing to accept that Sprint's network may not perform quite as well as Verizon's, or maybe even perennial No. 2 AT&T.

It's also important to note that raw dollars are not the only factor to consider when looking at each carrier's cheapest post-paid (contracted) option. For example, the fact that T-Mobile does not charge overages, but instead slows customers down when they exceed their data allotment, is worth noting, especially for people looking for low-cost plans.

Here's a look at what each carrier has to offer, whether you bring your own phone or purchase the cheapest smartphone each one offers.

AT&T

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The company that brought you those omnipresent "Can you hear me now?" ads offers the iPhone 4s for $99 as its lowest-priced smartphone. That model may be a few years out of date, and it lacks the latest LTE technology, but it still offers the Siri voice assistant and the ability to run a wide selection of apps.

AT&T only sells the phone with all money paid up front (while it offers installment plans on pricier models), and it charges a $20 activation fee. The company does offer phone insurance for $7 a month, but that seems like a silly add-on for a $99 phone, and for this comparison, we'll assume all offers of insurance are declined.

As for service, AT&T's cheapest plan costs $45 for unlimited talk and text, as well as a paltry 300 MB of data. The company breaks down the $45 into a $25 plan charge and a $20 access charge, though both are mandatory. The plan also has a big drawback: Overages cost $20 per 300 MB on 300 MB plans compared to $15 per 1 GB on all other plans (including the next tier, the$55 2 GB plan). The good news -- if anything on this chintzy plan could be considered good news -- is that while the $20 activation fee is noted on the phone purchase page, it does not appear on the final bill.

Should you choose to bring your own device (BYOD), AT&T offers the same $45-a-month 300 MB plan with the same overage charges.

Sprint

In addition to selling customers a cheap phone outright, Sprint will also sell one to them on a 24-month installment plan. It offers two low-end but perfectly serviceable Android phones for either $120 up front or $5 a month for two years (though financing requires whatever the carrier considers "good credit" in order to qualify).

The lowest-end plan offers unlimited talk and text, along with 1 GB of data, for $20. Add in a "monthly access charge" of $20, and the total comes to $40 a month if you want to have the phone anduse it. Technically, Sprint charges a $30 activation fee, but it's currently waiving it as part of a promotion (which could end before long). Extra high-speed data costs $15 per 1 GB, but Sprint does not charge overages for this plan; instead it slows customers to 2G speeds after they use up their data.

On a BYOD basis, Sprint charges the same $40 a month and is also waiving the activation fee, but the company does not make it easy to figure that out. Its self-service options all require selecting a phone, so to bring your own, you'll need to interact with a customer service person.

T-Mobile

Unlike the previoustwo carriers, T-Mobile makes it very clear that its prices are the same whether you buy a phone or bring your own. If you need a phone, the company offers an entry-level, off-brand Android model that costs $49.99 but requires a $20 SIM kit, for a total cost of $69.99. Phones can be purchased outright or bought in installments over 24 months.

T-Mobile CEO John Legere has pushed the elimination of overage charges. Image source: T-Mobile.

The lowest-end T-Mobile plan is not actually all that low-end. It offers the same unlimited calling and texting as anyone else, but for $50. It offers 2 GB of high-speed data, but it does not charge overages after that. As with Sprint's plan, when users exceed their limit, they have the option to either buy more high-speed data or finish out the billing period at slower speeds.

On this plan, T-Mobile does allow access to its Music Freedom service, which lets subscribers listen to music from the company's partners and does not count against their data cap. Users would need a more expensive 3 GB plan, however, to gain access to Binge On, the carrier's similar video-streaming service.

Verizon

The smallest Verizon plan starts at $30 for 1 GB, but of course, customers also have to pay a $20 "line access fee" for a total monthly plan charge of $50. Overage charges are a straightforward $15 per extra 1 GB, and plans cost the same whether customers buy a phone or bring their own device.

The company offers an array of LG for phones for $120, which it will sell customers outright or finance over two years. Verizon waives its phone activation fee for online orders.

Which is the best deal?

It's worth noting that none of the four major wireless carriers raises prices for customers bringing their own devices (something that was not always true). In addition, though most carriers make some mention of setup or activation fees, these are waived for online buyers.

Carrier Data Fees Phone Overages Monthly Cost
AT&T 300 MB NA $99 $20/300 MB $45
Sprint 1 GB NA $120 NA* $40
T-Mobile 2 GB NA $69.99 NA* $50
Verizon 1 GB NA $120 $15/GB

$50

*Sprint and T-Mobile slow speeds after a customer uses his or her high-speed allotment.

On monthly price, Sprint is the clear winner here. AT&T comes in second, but its plan only make sense for people who will literally almost never touch data, as the overage charges will pile up absurdly fast at $20 per 300 MB. It's probably fair to dismiss Verizon's offer, given the relatively high price and risk of overages. T-Mobile's deal might be worth the extra money, as it comes with double the data of Sprint's $10 cheaper offer (and that data rolls over from month to month if it's not used).

Sprint wins on price, and its lack of overage charges give budget-strapped consumers protection from nasty surprises at the end of the month. If you have the extra $10, T-Mobile also deserves consideration because of the extra data allowance, as well as the unlimited music streaming.

The article Which Carrier Offers the Cheapest Wireless Plan? originally appeared on Fool.com.

Daniel Kline has no position in any stocks mentioned. He looks a little like John Legere. The Motley Fool owns shares of and recommends Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.