No Contract Wireless Carriers in the US (Archived Report)

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Archived Report:
No Contract Wireless Carriers
in the US

by Bruce Kramer

Docid: 00021160

Publication Date: 1603

Report Type: MARKET


No contract wireless services no longer have the stigma that they only offer
old phones and are geared toward people with poor credit. T-Mobile starting
offering no-contract calling plans in 2013 in an attempt to jumpstart its
lagging performance in the US mobile market. This change led to a period of rapid subscriber
growth, and the rest of the industry took notice and started rolling out their
own no-contract plans. This report discusses
the evolution of the no contract business model and discusses the major players
in the sector.

Report Contents:


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No contract wireless plans have taken over the wireless industry. Once associated with offering limited, antiquated
phones and being geared more toward low-income customers or the elderly,
consumers can now select from the latest phones to use on 4G networks without
having to sign the two-year contracts there were so popular just a few years
ago. As the contract model has changed, carriers have stopped subsidizing the
cost of a new phone and instead are letting customers lease their phones or
amortize the cost of the phone over several months. This new model has also
brought transparency to the market since customers now know exactly how much
they are paying for their phone and their plans. Of all of the major carriers in the US, AT&T is the only one still
offering traditional two-year contracts, but they also offer a no-contract


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This table shows the benefits and drawbacks of
no contract wireless plans for consumers and carriers.

Table 1. Benefits and Drawbacks for Consumers and Carriers

  • Flexibility. 

    The biggest upside to using this type of mobile
    plan is the obvious flexibility that comes with
    it. Consumers are not locked in to a
    long-term deal, so they are free to switch
    providers or drop their service at any time
    instead of having to pay hefty termination
    charges, which can reach into the hundreds of

  • No Background Checks. 

    Pay-as-you go cellphone plans do not require credit
    checks, so they might be an attractive option to
    consumers with poor credit. 

  • Less Expensive for People
    with Minimal Needs. 

    Prepaid plans are also good
    for people who do not use their phones every

  • Better Customer Service?  Logan Abbott, president of, a
    comparison shopping engine primarily for cell
    phone users, suggests that (in theory at least)
    no contract carriers should provide better
    customer service since customers can switch to
    another provider at any time. Nonetheless, the
    blogosphere is replete with complaints about
    prepaid phone services. Depending on the vendor,
    there may be little difference between contract-
    and no contract-based service from a customer
    support perspective.

  • More ability to bring your own device. 

    Many carriers are now allowing customers to
    bring their own unlocked device to their plans.

  • Use it or lose it. 

    Many post-paid cellular plans now offer the option
    to roll over unused minutes from one month to
    the next. Prepaid plans, however, usually expire
    after a certain date. 

  • More expensive for data. Most of the plans covered
    in this report offer unlimited voice and
    texting, but they offer only limited amounts of
    data. Some companies offer plans that include
    blocks of 4G data that then switch over to 3G,
    or less, when they are exhausted. Pricing plans
    then get more expensive as the amount of data

  • Potential upfront phone costs.  Customers pay for their phone upfront since
    they are not subsidizing the cost of the phone
    over a guaranteed two-year contract.

  • You might not own a
    Many carriers
    lease phones to customers, which
    means consumers never really own
    their devices. This can be a
    problem for people who like to
    cascade their old handsets to
    children or other family

  • Potential back-end
    People who treat
    their phones harshly may wind up
    having to pay extra wear and
    tear fees at the end of their

  • More customers.  With the promise of lower prices and no
    long-term service commitment, no contract
    carriers can boast a value proposition capable
    of luring customers away from the big players like Verizon and AT&T.

  • Network quality becomes less of a
    Contract carriers like Verizon and AT&T have a
    reputation for superior networks. That
    reputation is potent in an environment where
    customers are locked into two-year contracts. 
    In a no contract atmosphere where customers can
    change providers if their service is subpar,
    customers are more willing to take a chance on a
    no contract carrier network.  
  • No contract isn’t really
    no contract.
      While no contract
    carriers offer no contract phone service, the
    phones are another matter.  Unless
    customers are willing to buy a phone up front –
    often, an expensive proposition – or lease the
    device, they must pay
    for the phone in installments, effectively
    locking them in to the no contract carrier until
    the phone is paid off. 

  • As no contract carriers
    expand their customer base, their networks are
    being tested.
      No contract carriers must be careful to
    scale their network infrastructure to
    accommodate an increased customer load.  If
    not, any load-based vulnerabilities will be

Market Leaders

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All major wireless carriers now offer no-contract plans, but there
are also some niche players in the market as well. Leading players are AT&T,
Consumer Cellular, Sprint, T-Mobile USA, TracFone, Verizon Wireless, and Virgin
Mobile USA.

AT&T / Cricket Wireless

AT&T offers prepaid no contract
phone plans under the GoPhone brand name, which has been around since McCaw
Cellular came up with it in 1987. Today, the company offers to tiers of
no contract calling plans. Plans range from $30
for unlimited talk and text to $60 a month for 5GB of data at
speeds up to 4G. The company offers 22 phones through the GoPhone plan,
including the Apple iPhone 6, Android devices, and Windows phones. Customers can also bring their own device.

The company’s post-paid no-contract plan is called AT&T
Next. Customers can select plans that allow them to upgrade to a new phone every
12, 18, or 24 months, but the plans are complicated because customers actually
pay for their phones over 20, 24, or 30 months. This means that customers who
decide to upgrade after the minimum waiting period have to pay off the balance
of their device when they turn it in. An article in Techspot found that a
customer who buys a 16 GB iPhone 6 though AT&T Next can wind up paying $2,315
for it.

Cricket Wireless. Cricket Wireless has been around since 1999, but it became part of AT&T when
that company acquired Leap Wireless for $1.2 billion in 2014. As part of AT&T,
the company has a 4G network that covers 99 percent of the country.

Cricket offers three mobile plans and the biggest difference between them is the
amount of 4G data customers get. The basic plan provides 2.5 GB of data for $40
a month, the smart plan has 5 GB of data for $50 a month, and the pro plan
offers 10 GB of data for $60 a month.

Cricket offers both basic
phones and smartphones, including the iPhone, Windows phones, and Android
devices. Customers can also bring their own devices to the Cricket network.

Consumer Cellular

Consumer Cellular is a
no contract virtual network operator, meaning it doesn’t operate its own
network. It’s target audience are people who are older than 50, and it has a
marketing agreement with the AARP where it offers discounted rates to their
members. Consumer Cellular also has partnerships with RadioShack, Sears, and

Consumer Cellular offers separate plans for voice as well as text and data. The
most basic voice plan is designed for people who use their phones less than 20
minutes a month. It costs $10 a month and then charges $0.25 per minute for
calls. The plans then go up from there, depending on how many voice minutes the
customer wants each month. Plans offer 250 minutes for $15, 750 for $20, 1,500
for $30, 3,500 for $50, and unlimited for $50.

Data plans are structured
in a similar way: packages include a set number of text messages and an
allocation of data. The entry-level plan includes 30MB of data and 300 texts for
$2.50. Other plans are 1,500 texts and 150MB of data for $5.00, 3,000 texts and
500MB for $10, unlimited texting and 1.5GB of data for $20, 3GB of data for $30,
and 4GB of data for $40.

The company offers a full
range of basic and smartphones, including the iPhone 6 and multiple Android
devices. Customers can opt to pay monthly installments for their handsets to
help make the cost more manageable. Consumer Cellular also lets customers bring their own device as long as it is an
unlocked GSM phone or used to run on AT&T’s network.


Sprint went 100 percent no contract in 2015. After slipping to fourth place in
the market, Sprint is now marketing itself as a low-cost alternative to the
other major players. It has gone so far as offered to cut AT&T and Verizon bills
in half if customers switch to their network.

Customers who opt for a post-paid
plan lease their phones for 24-months, which is not that much different than a
two-year contract except customers do not have to pay a few hundred dollars for
their phone up front and they have to turn in the device at the end of the
lease. Customers can also opt to pay an extra $10 a month so they can upgrade
their devices earlier.

Sprint also offers prepaid calling plans. They all offer unlimited data, talk,
and text messaging, so the only real difference is the amount of data customers
get every month. Plans with 1GB of data costs $35 a month, 3GB is $45 a month,
and 6GB is $55 a month. Additional data packages are available for $10 per 1 GB.
Prepaid customers can choose from an iPhone, Android devices, or some basic

T-Mobile USA / MetroPCS / GoSmart Mobile

T-Mobile is the most
interesting company covered in this report because it was the first carrier to
go to a full no-contract model in 2013. Before then, the company had been
struggling as the smallest of the four major wireless carriers both in terms of
customers and 4G coverage. Its subscriber churn rate
was more than twice as high as Verizon Wireless and AT&T Mobility. Its parent
company, Deutsche Telekom, was not fully committed to staying in the US market,
but a deal to sell the company to AT&T in 2011 fell apart after the federal
government expressed concerns about it.

In 2013, T-Mobile decided
the best way to differentiate itself from AT&T, Sprint, and Verizon was to
become a no contract carrier. It moved all of its customers into no contract
plans, and a few months later, it added 4.4 million more prepaid customers by
purchasing MetroPCS for $1.5 billion. This shift in strategy has
been transformational for T-Mobile. It has been adding customers faster than any
of the other major carriers and has passed Sprint as the third largest carrier
in the country. Since then, the rest of the telecom industry has taken notice
and followed suit by buying up prepaid carriers or moving to the no-contract

T-Mobile’s basic plan costs
$50 a month and includes 1GB of LTE data as well as unlimited voice, texting, and
data service over its 3G network. They also allow customers to roll over their
unused 4G data into the next month. From there, the plans scale based on the
amount of 4G data that the customer wants each month; 3GB is $60 a month, 5GB is
$70, and unlimited data is $80 a month.

T-Mobile also offers most
of the most popular phones, including the iPhone 6 and the upcoming Galaxy S6.
Customers can also bring their own device. The company offers a unique plan
called Jump on Demand that lets customers upgrade phones up to three times a
year. Subscribers sign up for an 18-month lease and pay a fee of between $15 to
$30 in addition to their lease payment to be able to upgrade.


MetroPCS continues to
market itself under its own brand, although it does promote the fact that it
uses T-Mobile’s network. The company offers three plans, and like its parent
company, they vary based on the amount of data included in them. The basic plan
includes unlimited voice, text, and 3G data as well as 1GB of LTE data for $30 a
month. The next package offers 3GB of data for $40 a month, 5GB for $50 a month, and unlimited data
for $60 a month.

MetroPCS does not offer the
iPhone, but it does sell the popular Samsung Galaxy S7 as well as several other
Android devices.

GoSmart Mobile.

T-Mobile launched the GoSmart brand in early 2013
to target budget-conscious consumers. Its plans and phones are available online
and at thousands of dealer stores across the nation. The company offers three
packages, and, like T-Mobile, the difference between them is the amount and type
of data being used. The difference, however, is that the packages include set
limits of 3G data instead of 4G. GoSmart plans are also unique in that, no
matter which plan customers subscribe to, they get unlimited access to Facebook.

The least expensive plan
offers unlimited talk and texting for $25 a month. The same plan with 2.5GB of
3G data costs $35 a month, 5GB is $40 a month, and 10GB is $45 a month. The
company only offers three phones, but it also sells a SIM card that customers
can use with an iPhone if they want to bring their own device.

TracFone Wireless

TracFone Wireless is a
virtual network operator that has agreements with all four of the nationwide
carriers. It markets its products under multiple brands, including Net10
Wireless, Page Plus Cellular, SafeLink Wireless Simple Mobile, Straight Talk, Telcel America,
Total Wireless, and TracFone. Each of these brands have their own identity and
offer different calling plans.

Net10 Wireless.

Net10 offers a lot of different plans. Individual plans include varying buckets
of minutes for voice, text, and Internet access, ranging from 200 minutes for
$15 and 1,000 for $25. Net10 also offers five different plans that offer
unlimited voice and text messaging, but the plans offer different amounts of
data. The plans offer unlimited amounts of data, but only a set amount goes over
the company’s high-speed network. Any data used over that is restricted to 64K

The entry-level plan
includes unlimited domestic calls and text messages with 500MB of data for $35.
The same plan with 1.5 GB of high-speed data is $40. Other plans offer5GB of data for $50,
7GB for $60, and 10GB for $75. Net10 also offers family
plans or international calling plans.

Net10 customers can
purchase a phone from the carrier, including the Samsung Galaxy S5 or the iPhone
5S, or bring their own device.

Page Plus Cellular.

TracFone’s parent company, America Movil, purchased Page Plus Cellular in 2013.
They offer five no contract plans. The basic plan includes 250 minutes of voice
service, 250 text messages, and 10 MB of 3G data for $12 a month.
 The second plan includes 1,500 minutes of
voice calling, unlimited text messages, and 1GB of 4G data for $29.95 a month.
The other three plans offer unlimited voice and data, with a varying amount of
data. One and a half GB is $39.95, 5 GB of data is $55, and 7 GB is $69.95. Any
data connection over the allotted amount slows to just 2G speeds of 64K bps.

SafeLink Wireless. SafeLink is a free mobile program for people
who fall below the poverty line or participate in certain government programs.
Only one person per household can be enrolled in the program. Customers get a
free phone, unlimited text messages, and 500 free minutes for the first four
months. The plan then goes to 350 minutes and unlimited texting every month
after that.

Simple Mobile.

Simple Mobile has been part of the TracFone family since 20012 and it offers
service over T-Mobile’s GSM network. Customers either buy a GSM phone from
Simple Mobile or bring their own device and purchase a SIM card from the carrier
in order to get service.

The company offers four plans that offer unlimited voice
and text messaging, but varying amounts of data. They range from $25 a month for
no data to $55 a month for 10 GB of 4G data. Any data used over that is at 2G
speeds. The company also lets customers purchase several months of service at
once for a discounted rate.

Straight Talk.

Straight Talk is another no contract mobile carrier that is offered exclusively
through Wal-Mart. Their plans are similar to other TracFone plans because most
of them include unlimited data, but the connections slow down considerably once
a certain threshold has been exceeded. 

The introductory Straight
Talk plan, called All you Need, includes 1,500 voice minutes, unlimited texting,
and 100 MB of data. The company also offers a plan that include unlimited voice
and texting as well as 3GB of high-speed data every month. Once that allotment
has been exhausted, available bandwidth slows to 64K bps.

Wal-Mart sells feature
phones and smartphones as part of the Straight Talk brand. It offers the iPhone
6 as well as phones that run on Android and Windows, but it does not have the
very latest and most popular models of these devices. For example, the latest
version of the popular Samsung Galaxy line that is available is the S4, while
the telecom industry is preparing for the release of the Galaxy S6. 
Customers can also bring their own devices to the network.

Telcel America.

Telcel markets itself to Hispanic customers, particularly people who need to
make international calls since all of their plans include unlimited calls to
international landlines and bundles of minutes to Claro subscribers living in
Mexico and Guatemala (Claro is a popular brand name of America Movil, which owns
TracFone and Telcel America).

The cheapest plan includes unlimited calls in the United States as well as any
international landline and any mobile phone in China, Mexico, Canada, and India.
The company’s four plans then vary based on the amount of data. They range from
1GB of 4G data for $35 a month to 10GB of data for $60 a month. They also offer
a seven-day plan that includes 2GB of data for $20. This plan is designed for
international travelers who want to stay in touch with home.

Telcel America offers
feature phones and a few basic Android devices.

Total Wireless. 

Total Wireless is a no contract mobile plan sold
exclusively through Wal-Mart. They offer two types of individual calling plans.
The first one offers unlimited talk and texting but no data for $25, and the
second includes 2.5GB of data for $35 a month. Total Wireless also offers family
plans that let people share unlimited minutes and set amounts of data across
two, three, or four devices. Customers can also add 1.5GB of data to their
account for $10 at any time.

Total Wireless offers eight
Android smart phones, but the devices are not the latest cutting-edge devices.


TracFone devices are available at more than 90,000 retailers across the United
States. The plans are unique in that customers purchase bundles of minutes that
they can use for talk, text, and data. Plans start at 50 minutes for $9.99 and
go up to 200 minutes from $29.99, and customers can add bundles of 50 or 100
minutes to any plan that does not use a smartphone.

TracFone offers basic
feature phones from LG, Kyocera, Motorola, and Samsung, but since TracFone has
agreements with each of the major wireless carriers, customers can wind up
accessing different networks depending upon what phone they have. Customers also
have the ability to bring their own unlocked CDMA networks to TracFone, but
unlocked GSM phones will not work because the GSM SIM cards are pre-programmed
by manufacturers.  

Verizon Wireless

Verizon ditched the contract model in 2015 and now require customers to pay
for the full cost of their devices of a two-year period. Customers have the
ability to upgrade to a new device any time, but they will have to pay off their
original device first. Like most wireless carriers today, Verizon mobile plans
offer unlimited voice and data, with varying buckets of data. There are five
plans available: 1GB for $30, 3GB for $45, 6GB for $60, 12GB for $80, and 18GB
for $100 a month. Verizon customers also have access to all of the latest

Virgin Mobile USA

Virgin Mobile has been in
the US market since 2002 and they offer four different plans. The first
one does not include any data. Customers get 300 minutes
of talk and unlimited texting for $20 a month, but they have to use a Wi-Fi
connection for Internet access. The next plan has two options: for $35 a month,
customers can chose from unlimited voice, text, and data, although the only the
first 250MB is over a 3G or 4G connection. Or, they can opt for 300 minutes of
voice service, unlimited texting, and 2.5GB of data over a 3G or 4G network.

The next plan, called Unlimited
Everything + International combines unlimited domestic voice, 100 minutes of
international calling, unlimited domestic and international texts, and data

except the first 1GB is over 3G or 4G. The most expensive plan is $55 and
includes unlimited voice and text with 3GB of data over 3G or 4G networks.

Virgin Mobile offers feature phones and smartphones.

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Lower Prices and a Larger Selection of
Smartphones are Boosting Smaller Carriers

According to The NPD
Group, a leading market research company, lower prices and a larger selection of smartphones
available from no contract carriers like MetroPCS and Virgin Mobile USA are
adversely affecting sales at AT&T,
Verizon Wireless, and other tier-one (contract) carriers. 

Simple Inertia Is Preventing a Major Migration to
No Contract Carriers

All of the major carriers have moved to the no-contract model so they do not
have to subsidize the cost of expensive handsets and lock customers into two
year deals. This is a huge difference from a decade ago where consumers could
not even port their numbers from one carrier to another.

No Contract Is Becoming a Preferred Option for
Savvy Consumers

Before the major carriers started shifting to no-contract
models, savvy consumers were already starting to see them as attractive
options for smart shoppers who want to get the most out of their plans without
caring about switching phones every year or two to keep up with emerging
technology.  Customers who have to have the latest and greatest technology can
easily spend almost $100 a month on wireless plans associated with an Apple iPhone or the Samsung Galaxy.

The No Contract Market Segment Is Now Crowded

Now that the major players in the US wireless market are in the the no contract segment,
this part of the market is now overloaded with players. These companies aren’t the only ones getting involved in the no
contract market.  Wal-Mart was so successful selling prepaid mobile phones
through its stores that it launched its own brand of postpaid, no contract
wireless called Walmart Family Mobile, which operates on the T-Mobile network.  The plan offers unlimited calling and texting for $40 for the first line, and $35
for each additional line.

Mobile Carriers Are Suspected of Service Throttling

Now that data constitutes a major component of cell phone traffic,
some providers – contract and no contract – have been accused of data
“throttling”, or slowing their service to consumers who stream lots of videos or
play interactive games. It’s a phenomenon familiar to cable TV subscribers and
has the ability to affect a customer’s overall cell phone

AT&T Has Introduced a No Contract Wireless Home

In what may evolve into a trend, AT&T Wireless Home Phone allows
customers to complete calls from their existing home phone handset using the AT&T wireless network
instead of a landline connection. Customers can keep their existing home phone
number and handsets, and Wireless Home Phone is portable so they can take their
home phone with them to other locations in the US.

Wireless Home Phone customers can add their home phone line to an existing
FamilyTalk plan for $9.99 per month, or choose unlimited nationwide calling for
$19.99 per month, and the Wireless Home Phone device is free with a two-year

New, prepaid options for Wireless Home Phone include:

  • $20 per month for unlimited, nationwide calling.
  • $15 per month for 1,000
    minutes of international long-distance, including wireless and landline
    numbers in Mexico and calling to over 50 other countries such as Canada,
    China, and India.

  • One-time cost of $99.99 for the Wireless Home Phone device.
  • Voicemail, caller ID, and call waiting are all included at no additional cost.

Strategic Planning Implications

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The market for prepaid, no contract wireless services is expected to
continue to grow. IDC expects that by the end of 2015, there were 81 million prepaid
subscribers in the US.  The number one thing consumers look at when selecting a
prepaid carrier is price, so the market will remain very competitive, with most
of the companies offering unlimited voice and data packages at a flat monthly
rate without long-term contracts.

To help keep costs low, customers are encouraged to carefully examine add-on
options like insurance.  Michael Gikas, senior editor for Consumer Reports,
suggests that a very small percentage of people actually lose phones. The best
idea is to keep an old phone around, so if you do need one, you have a free one
ready to activate.  Young people, however, who tend to subject their phones to
greater abuse, might be well served to invest in loss and damage

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About the

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Bruce Kramer is a
regular contributor to Faulkner Information Services who has written
over 200 articles and white papers on the technology industry over the
last 16 years. In addition to working as an independent author and
analyst, Bruce is a former Senior Editor for Faulkner Information
Services and has over a decade of experience in the supply chain
management and business process outsourcing industries.

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