The second option might be cheaper but, let’s look at these facts too, prepaid costs versus the costs in a contract.
1) Going with a prepaid plan with the iPhone 4S 64GB costing you first off $849, then $25/month, after 3 years costs you $1750 in total, before taxes.
2) For a contract, with that “cheap” $299 iPhone 4S 64GB model, after 3 years of paying what I pay ($65/month) equals $2640 before taxes.
You save $890 if you stay with a prepaid plan, which you can opt out of anytime you want. Depending on your needs with a smartphone, a contract may just make more sense to you anyways, if those needs are too demanding for a simple prepaid plan.
For an example, I only text with my smartphone like 100 times a month, sent and received. I use like under 100 minutes per month too. I have to pay minimum $65/month on a contract just for that much stuff. I only use under 500MB’s per month, probably about 250MB’s per month only. I can actually live without data, honestly. So for me, it makes sense to go with a prepaid plan once my contract ends. It makes sense for me to go with buying a smartphone outright as in the long run it will be cheaper than going on a plan, if you look at the above statistics that I talked about.
I actually bought a Samsung Galaxy S during my 3 year contract in knowing that it would not extend my current contract and I could go with a prepaid plan after my contract ended. My usage can go down to $15/month if I wanted to, all I need to do is buy more minutes or whatever, to have more minutes or texts.
So it comes down to your needs, like I said. I think most people look at the cost of a smartphone upfront and think, “hey this is cheap, my friend has the same smartphone”. The contract details are shown on the back of the box, or the advertisement, saying “minimum 3 year contract required”, etc. Or in other words, “minimum $65/month contract for 36 months required”.
Two major breakthroughs in mobile smartphone plans is the ability to use a Smartphone in a prepaid plan, as of a couple years ago. The second breakthrough is the ability to use data on a prepaid plan.
The catch for those “breakthroughs” is that you must buy the smartphone outright, and you must pay like $20/month per 250mb’s of data, with either Telus or Bell.
Bear in mind though, if you go with buying a smartphone outright and activating it over a prepaid plan, you have to do everything yourself. You gotta spend the $500-$900 on the smartphone, then when you get it in the mail, unless you went to the store and bought it, you have to call your mobile carrier and specifically ask to activate the phone over a prepaid plan, and you tell them what your usage is and they will figure out how much minutes and texts you need, and how much data.
In my mind I like the price of $15-$25/month while leaving data out. There is the option to use data through Wi-Fi, which is a really good idea when you live in a bigger city.
If you ever decide to get a smartphone that is slightly older, try out eBay instead of buying it brand new if your okay without having a warranty on your device.
Last but not least, if I was to use my smartphone as my main phone, I would easily go for a contract as having a LAN line would cost at least $30/month alone for a phone line that can only be used at home. In the future I think LAN lines will fade away and smartphones will take over, or the use of digital phone lines over an internet connection (and who knows if 911 will be offered in those services at all in the future too, as it is not offered currently through Vonage or Skype). So it would cost around $90/month for a LAN line and a mobile phone line at the same time. Imagine if you were a traveller, and you wanted to use your Smartphone for everything, including the internet, you could do it… if you went with a plan around $90/month with a crapload of data that could be used on your Laptop, while using your mobile phone as your LAN line.
Answer the poll I created on this question, and see the results for yourself.
It should be either on this post or if you can’t find it, just go to this link.