Prepaid cell service: 5 reasons to consider it now

Prepaid cell service—as in service without a contractual obligation or early termination fee—continues to surge in popularity. If you’re intrigued by making the switch from a traditional contract plan, but haven't been keeping up with the fast-changing options to do so, here’s why you might want to try prepaid:

1. Prepaid plans offer a diversity of pricing schemes. You can buy prepaid service in three different ways:

• Prepaid bundles. These range between 30 to 5,000 minutes and cost $10 to $400;

• Pay-as-you-go plans. These charge 5 to 25 cents per minute used, with or without a $1 to $2 daily access fee or per-day-use charge; and

• Monthly-fee plans. These are much like a traditional contract plan, and range from 50 minutes to unlimited minutes per month.

2. You may save money—especially now. In the last Consumer Reports survey of satisfaction with cell-phone service, more than 70 percent of those who had switched from a regular contract-based plan said prepaid was costing them less. And that was before what’s starting to look like a price war in prepaid. The latest salvo: Two Tracfone monthly plans under the brand name “Straight Talk,” available in about half of the country. One plan offers 1,000 voice minutes, 1,000 text or multimedia messages, and 30 MB of data over Verizon’s network for just $30; the other unlimited voice and text, plus 30 MB of web access for $45.

First impressions: T-Mobile's myTouch 3G smart phone

The new T-Mobile myTouch 3G smart phone, the second phone to use Google’s Android operating system, is promising in some ways. Yet my demo of the phone at press preview yesterday also revealed some drawbacks – some of them possible pre-release flaws that its manufacturer, HTC, is still troubleshooting.

Available in early August, and priced at $200 with a 2-year contract, the myTouch is noticeably smaller and lighter than its predecessor, the T-Mobile G1 – which will continue to be available from T-Mobile and is recommended in our Ratings, available to subscribers.

Here are my first impressions, based on the demo:

Concern grows in Washington over exclusive cell-phone deals

Scrutiny of cell phone exclusivity deals, in which hot new phones are available from only one carrier, is intensifying in Washington. Within the past day, the chairman of one Senate subcommittee has weighed in with a list of recommended steps to address such deals, and the Wall Street Journal reports the Department of Justice has opened an investigation into them.

Senator Herb Kohl, who chairs the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, sent a joint letter to the Federal Communications Commission and the Department of Justice. Calling exclusivity arrangements “a serious barrier to competition,” he urged the FCC to open its own investigation into them and the Justice Department to take “all necessary action to keep the market open to competition.”

The FCC has already announced they’ll open a proceeding to investigate handset exclusivity—another recent development—with the exact question they’ll be investigating expected to be announced within the next few weeks, after which comment will likely be received from interested parties representing consumers, carriers, and manufacturers, among others.

Today’s Wall Street Journal report indicates a parallel, broader investigation at the Department of Justice into whether cell phone carriers are abusing their market power to the detriment of consumers and competitors. Areas of investigation, according to the report, could include exclusivity deals and limitations on the types of competing services that can be offered on carriers’ networks—such as curbs on voice-over-internet calling from smart phones using third-party applications.

Advocates at Consumers Union, the parent company for Consumer Reports, welcome the growing attention in Washington to these issues. Singling out Senator Kohl’s letter, in particular, CU says "exclusive deals with manufacturers and the blocking of applications are common practices among national providers.  There doesn't seem to be any market constraint on this behavior.  We applaud Senator Kohl for taking a strong stand, because consumers need some relief."

In addition, a  bipartisan group of senators, all members of the U.S. Senate Committee on Commerce, Science & Transportation last month asked the FCC to examine exclusivity agreements and act accordingly if the agency finds “they unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace." —Paul Reynolds

iPhone 3G S tops new smart phone Ratings, edging out Palm Pre

The iPhone 3G S tops our new smart-phone Ratings (available to subscribers), with strong performance in everything but voice quality, an area in which few phones score well. It's not a runaway winner, though. A number of other phones ranked close to the iPhone, including the Palm Pre, which turned in a fine performance, as we expected from our head-to-head review of these two highly publicized rivals.

The phones vary significantly in how they achieve their high scores. The iPhone 3G S edged out high-scoring competitors such as the Palm Pre and BlackBerry Storm thanks to a superior display, reinforced by top-notch multimedia, navigation, Web browsing, and battery life. However, the Pre, the Storm, and other BlackBerry models bested the iPhone in messaging, and the Pre, with its new deck-of-cards handling of multiple applications, is a superior multitasker.

To better display those differences, we recently added more attributes to our Ratings and put more emphasis on the display, ease of navigation, and multimedia and messaging prowess. In turn, we've somewhat reduced the contribution of talk time (as reflected in our battery life results) and voice quality, in part to reflect the growing importance of non-voice use of smart phones.

iPhone 3G S vs. Palm Pre: A video shootout

They're the two hottest smartphones of the year. The iPhone 3G S and the Palm Pre emphasize multimedia capabilities and are centered on versatile touchscreens that are among the best we've ever tested. Both even cost the same: $199 with a two-year contract (though there's a more capacious iPhone that costs $299.)

Both are also fine performers that we expect to formally recommend next week, once we've fully completed our tests and added them to our smart phone Ratings. (Both Consumer Reports Ratings and Recommendations are available to subscribers.)

Meantime, here's a Western-themed video shootout, in which phone-slingers Mike Gikas (at the iPhone end of the saloon) and Paul Eng (representing the Palm Gang) settle their differences.

Mike fires with the iPhone's new Voice Control feature, which allows you to dial numbers and even search for music by speaking to the phone. He also singles out the camera on the 3G S, which offers features lacking from past iPhones, like auto-focus and the ability to shoot videos, and adds nice video-editing and tap-to-focus capabilities.

iPhone 3G S: First, and mostly positive, impressions

The new Apple iPhone 3G S.
[ Photo courtesy of Apple ]

Based on a few hours of use, the new iPhone 3G S lives up to its promise—or it does, at least, once it’s actually up and running.

In a seeming rerun of last year’s problems with the iPhone 3G, eager new iPhone 3G S owners have been plagued by activation problems today—the phone’s first day of sale.

We succeeded in buying (at retail, like any other consumer) three 3G Ss by 10 am this morning. As of 4:30 pm, we’d succeeded in activating only two of the three. The screens of the remaining reads that it’s “Waiting for activation,” which “…may take some time.” Indeed. Some iPhone 3G S owners have been told the wait may be as long as 48 hours, according to Apple Insider.

Here’s what we have observed so far in our labs:

The display seems largely unchanged. Which is to say it’s better than fine. Contrast appeared to be slightly higher than on earlier iPhone models, we thought, but the difference was modest even in side-by-side comparison. While the screen is claimed to be more resistant to oily smears, due to a special coating, there wasn’t a noticeable difference in smudge resistance between the 3G and 3G S screens in a grueling, selfless "Happy Meal" test—in which we ate fries and then ran our fingers across the screens.

Claims to higher speed appear to stand up. We measured (using the stopwatch of an iPod Touch and with 3G network strength at a full five bars) the times to fully load some popular and fairly demanding Web home pages—including the New York Times, BBC, and TMZ—on a 3G and a 3G S. All loaded at least 50 percent more quickly on the 3G S, saving at least nine seconds of load time, and some met and even exceeded the claim that the 3G S is up to twice as fast as its predecessor, saving 15 seconds or more of load time—which actually feels like quite a big difference.

Great gifts for grads

Celebrate your grad's recent success with an appropriate gift, such as a digital camera. Read our post for other ideas.
[ Photo courtesy of: Harrison Keely ]

I can still recall my college graduation fondly. Well, it was only two years ago. Everyone wanted to have their photo taken with me, which was a first, and I got lots of gifts—mostly cash that disappeared rather quickly into my gas tank or my stomach, plus a few gag books.

In hindsight, there are a few things I would have liked to receive as I made the transition from college dorm to real world. If you're shopping for a college grad, here are my suggestions for a gift that is both practical and enjoyable:

Microsoft Office (or equivalent software): No more pencils, no more books…and no more access to school labs with all the software a student needs to get by. Give your grad the tools he or she will need to write a résumé; see our recent post Software Savings: Microsoft Office on the cheap on the best deals in word processing software.

Printer: Once the résumé is letter-perfect, a good printer and quality paper can really come in handy.

Smart phone: A cell phone your grad can use to field incoming calls and e-mails from prospective employers (you can only hope) would be nice. Two popular smart phones are the Palm Pre and Apple's iPhone 3G. (And an ever faster version, the Apple iPhone 3G S, is due out today.) But there are other choices in our cell phone Ratings, available to subscribers. (And don't forget to check our Ratings of cellular service companies, also available to subscribers, to find the best wireless carriers.)

Text messaging is overpriced, say CU advocates

The nation's four big carriers have all raised their text-messaging rates in the last few years.
[ Photo courtesy of: kiwanja ]

Mystified as to why the cost of a text message from all the major cell-phone carriers rose to a hefty 20 cents apiece in recent years? This in spite of the continuing rise in popularity of messaging—and, presumably, its value as a competitive feature of cell-phone plans?

Joel Kelsey, an advocate with Consumers Union, the publisher of Consumer Reports, today called the price increases in text messaging “a failure of competition, because the increases are manifestly unnecessary to cover provider costs.”

Kelsey emphasized that text-message files are very small—with five hundred of them containing less data than a one-minute voice call, he says. Further, Kelsey points out, there’s been an “explosion of texting” in recent years, with carriers reporting up to a six-fold rise in text transmissions within just a few years.

“Carriers should be experiencing economies of scale and sharing that savings with consumers,” says Kelsey. Prices are discounted heavily for text messages bought in monthly bundles that typically run into the hundreds. But carriers have steadily, and in lockstep, raised the price of sending single texts.

Cell-phone exclusivity: Not good for consumers, say critics

Is it fair that if a consumer wants a particular model cell phone—an Apple iPhone 3G S or a Palm Pre, say—they must use the wireless service provider chosen exclusively by that phone's manufacturer? A U.S. Senate committee has asked the FCC to investigate the matter of cellphone handset exclusivity.
[ stock photo courtesy of: Ben Shafer ]

With the iPhone 3G S launching Friday, available exclusively from AT&T, and the Palm Pre having just launched, available exclusively from Sprint, it's a good week to ask: Is having particular mobile phone handsets available from only one carrier a good thing for consumers?

Maybe not, according to four senators who sent a letter yesterday to Federal Communications Commission (FCC) Commissioner Michael Copps to review the exclusive arrangements between wireless carriers and cell phone manufacturers. Advocates, including Consumers Union, publisher of Consumer Reports, are also weighing in against such deals.

The bipartisan group—comprising Senator John Kerry (D-Mass.), Chairman of the Commerce Subcommittee on Communications, Technology, and the Internet, along with Senators Roger Wicker (R-Miss.), Byron Dorgan (D-N.D.), and Amy Klobuchar (D-Minn.), all members of the U.S. Senate Committee on Commerce, Science & Transportation—today asked the FCC to "examine this issue carefully and act expeditiously should you find that exclusivity agreements unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace."

Also, in remarks prepared for delivery later today to another congressional committee—the Senate Judiciary Committee—Joel Kelsey, a policy analyst with Consumers Union, says that handset exclusivity agreements "artificially limit consumer choice, restrict device innovation, and lead to higher prices." In addition, countering industry arguments that such exclusivity arrangements are an essential feature of the cell-phone marketplace, Kelsey points out that "handset manufacturers in Asia and Europe are able to sell 70-80 percent of...phones independent of exclusive deals."

More later on Kelsey's remarks to the committee on another hot-button consumer issue with cell phones: The uniformly—some say suspiciously so—high price of sending text messages.

Meantime, the Commerce Committee holds a hearing later this week on cell-phone exclusivity. —Paul Reynolds

GPS on the new iPhone: (Re)enter Navigon

Navigon's MobileNavigator software app for the new Apple iPhone 3G S (Click to enlarge.)

After declaring last month that it would leave the U.S. market for GPS units, the company has now announced new software in the works for the soon-to-be-released iPhone 3G S. The downloadable app, called MobileNavigator, will be available later this month and will offer turn-by-turn directions—one of the feature upgrades on the new iPhone.

The Cars blog reports that two version of the software will be available: a Lite version with maps but limited functionality, and a full version with Navigon’s usual complement of features—reality view, turn-by-turn guidance, lane assistance, current speed, day/night mode, and points of interest. Prices will be available upon release.

Navigon is joining TomTom in jumping on the iPhone bandwagon. The latter recently announced plans to release its own app software for the next-generation phone, including a car dock, microphone, and speaker to fully mimic a standalone GPS unit. TomTom for the iPhone is set for a late-summer release.

Not planning to buy the iPhone 3G S? You can still get guidance from standalone units. We’ve just updated our Ratings of GPS navigators (available to subscribers), so take a look. —Nick K. Mandle