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ETFs Without a Hardware Subsidy and No Data-Only Plans Have Me Flustered

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Over the weekend, I did a bit of research into my crazy new idea. As my Palm Pre (s palm) was put on notice back in November, I’m looking at dropping it for an fast, new Android (s goog) device in the first quarter of 2010. I have an iPhone 3GS (s aapl) as my primary cell and I’m an advocate of using Google Voice to manage my incoming calls — it’s especially handy with more than one handset. So I really don’t need two or more voice lines with my current setup. Using the Nokia N900 for both Google Talk and Skype voice calls actually sheds the spotlight on this fact — with fantastic Google Voice or voice over IP integration, a second “handset” could easily be a data-only device for me. That’s where my research for a data-only SIM card started… and quickly ended due to the dreaded ETF, or Early Termination Fee.

Since the new Google Nexus One offers known specifications that will meet my needs, I decided to look at T-Mobile for data. The carrier recently introduced some contract-free voice / text / data plans, so I figured there might be a plan for my new strategy. Sure enough, I found the T-Mobile Total Internet plan, which is $39.99 a month and offers up to 10 GB of data per month. With the plan, you can make voice calls, but you’ll be paying by the minute. That’s a chance I’m willing to take, since I have another dedicated handset for voice and because I’m thinking that a Skype phone number ought to provide cheap insurance. And most of the folks that I talk to on a regular basis are all on Google Talk already, which works just fine over 3G or Wi-Fi. So I added the plan to my cart.

The next step was to choose a device, but since I’ll be providing the hardware, I simply chose the first option, which was for a free SIM card. Thinking I was good to go, I went to checkout and then the dreaded two-year commitment and $200 Early Termination Fee information popped up. Here’s the burning question: if ETFs are meant to protect carriers against early losses of subsidized hardware, why would there be an ETF associated with a data-only plan? The fact is — there shouldn’t be one and it’s tragic that the FCC allows for this to happen in the U.S. Ironically, after tweeting about this over the weekend, T-Mobile has updated it’s site and I currently can’t choose just a SIM card for this plan.

While it may appear that I’m bashing T-Mobile over this, I’m simply using this situation as an example. The fact is: I want to give T-Mobile $40 a month to use unlocked phones as data-driven devices. But I won’t do that if there’s an illogical fee that I could end up paying for. What if I have a career change in the next two years and don’t need to review phones any longer, for example?

This is part of the reason that unlocked phones simply don’t do well here in the U.S. In other countries, carriers often use the same voice and data frequencies, so you simply shop around for the plan and SIM card that suits you best, pop it in your phone(s) or your data device and you’re good to go. Here a SIM card for an unlocked phone works with either T-Mobile or AT&T for voice, but unless the device supports quad-band HSPA (most, if not all, don’t), you only get fast 3G data on one network or the other. There’s simply little to no incentive to buy an unlocked phone like the Google Nexus One.

Let’s say for a second that the Nexus One will be unlocked — which is all but officially confirmed. It won’t support AT&T’s (s t) 3G network, so very few people will even consider an AT&T SIM or plan. Why would you when the primary use case of the device is for apps and the web, which are data-driven services. These days, the voice component of a smartphone is more of a necessary add-on rather than the primary function. So that brings you to T-Mobile, which does offer contract-free plans with the Even More Plus Plans. The cheapest one offers 500 voice minutes along with unlimited text and web for $59.99 a month. That’s $20 more per month than the Total Internet Plan because it offers the voice and text component — that I don’t need. Texting through Google Voice on an Android phone — or via the web on any other platform — is just fine.

In fairness to T-Mobile, let me look at the situation with AT&T — you can add just the data component to a smartphone or PDA for $35 a month. OK, that’s reasonable, but what if I don’t need the voice component? No can do — this is an add-on for existing voice plans. For data only , you need a SIM card tied to the $60 a month DataConnect plan, which nets you the same 5 GB of monthly bandwidth for almost double the price of the add-on. There is a $35 plan, but that’s limited to a paltry 200 MB, so it’s a non-option for me. So let’s say I was willing to go with the $60 a month data plan — you can’t do that with just a SIM card, at least not on AT&T’s website. Instead you have to pick a device and we all know what that means. Yup, this is where the ETF comes in again. Either that, or I can buy a device I don’t need at full retail price, which is often higher than the ETF in the first place.

Simply put, this whole experience is like running on a treadmill — I keep going and going to find a solution, but essentially, I’m stuck in place. It’s time for a real shakeup in the U.S. cellular market because data, not voice is where it’s at. I don’t know who will cause this shift — the FCC, Google, or someone else entirely — but it’s long overdue. I know I’m a bit ahead of the curve on the need for data-only plans without ETFs, but these territorial cellular fences need to be torn down.

57 Responses to “ETFs Without a Hardware Subsidy and No Data-Only Plans Have Me Flustered”

  1. T-mobile does sell plans with just a SIM card and no contact, which means no early term fees. They have a plan called the Even More Plus which is a contract free plan that is cheaper then their standard Even More plan. But you do not get any discounts in hardware.

    I am about to sign up myself because I amw ith AT&T and with the same plan I could have with T-mobile, or close to the same, it is about $70 per month cheaper. We plan on just bring out iPhones over. We do lose out in 3G but for us it’s not really an issue.

  2. “it’s tragic that the FCC allows for this to happen” – I see this article (rightfully) generated some frustration. How about we do something about it. Anyone knows a direct contact to the FCC? If everyone who said something here would point out the problem, maybe (just maybe) something would occur. (We can even cc the service providers.) Grassroots work!!!

    On a related note. I have an iPhone 3G that I purchased in Budapest, Hungary October 2008 with a one year contract. After the expiration of the contract I unlocked it. I am in the US now (though this is a temporary state for a month and a half). I have a T-mobile pre-paid (which is the better deal) and an AT&T pre-paid (which is the worse deal but it works better in terms of coverage in the areas I spend time in). I walked into AT&T and told them that I need data. They were happy to sell me 100MB for $20 (rip off, but OK, I’ll just be careful with usage outside of Wifi). Except, it never worked. Another AT&T person told me they should have never sold me the plan because if I want it for the iPhone or Blackberry they cannot sell it to me. I mean, what the hell? Data is data. And what’s wrong with taking my money (actually ripping me off pretty bad). I cannot sign a 2 year contract (I can but it makes no sense). Come Feb 6 I am out of the country until June. And then I’ll be gone in September. And won’t be back until December.

    So there are other practices that the FCC should hear about.

    The problem is that I fully understand that Kevin will not go head to head all the providers on a grassroots effort. He depends on info from them, phones from them and this is fine (actually the way things should be). But maybe someone else with a blog or other infrastructure for organization. Let us know if you do!! Peace.

  3. Good article.
    I’m currently on Tmobile’s EM+ with the N900 and loving the service and speed of their 3.5G network.I’ve canceled my AT&T service and use Gvoice and my old line on the N900. But I started to wonder about data only plans after buying an Archos 5IT Android. Great device, but it’s begging for an always on data plan. Haven’t been able to tether with my N900 yet, so I’ve been wondering about getting a MiFi. The cellular industry is insane in the US. The FCC needs to solve for this. 5 years from now it will be all about the data.

  4. UPDATE: Checked with a friend that works for Tmobile. 40$, unlimited data, m2m, no etf, one time activation fee. they can barre voice or pay per minute.

    There is a problem with this plan:

    You could get the T-mobile Even More Plus 500 Plan ($29.99) and then add on unlimited data for $10. Total cost: $39.99/month, no commitment, no ETF.

    Its meant for non-smartphones, not sure if t-mobile cares or if they can detect you using an unlocked smartphone.

    • T-Mo knew right away I was using an iPhone when I called them, so they definitely know. It’s just whether they’ll *let* you. I’ve been using the $6 T-Zones plan as a way to get full internet for years, but I’ve been grandfathered at this point. I’m doubtful they’ll let this go on with new plans.

  5. You could get the T-mobile Even More Plus 500 Plan ($29.99) and then add on unlimited data for $10. Total cost: $39.99/month, no commitment, no ETF.

    You get 500 voice minutes with that. No, you don’t need those. But you said you wanted to pay Tmo $40/month for unlimited data, and you get that with this combination.

    This is the cheapest option I could come up with on a US GSM carrier.

      • I don’t think you have to buy a phone for the EM+ plans. The web page may not let you do it, but those plans are supposed to let you “bring your own phone”/device.

      • medah4rick

        Nice for some reason i thought an internet add on was $20. Apparantly its $10 for a dumbphone and $25 for a smartphone. $40 for internet without ETF is great. Snd u get 500minutes for voice if u need them.

        Too bad there is such a small selection of unlocked gsm phones available that utilize tmo 3g. The only one is n900. Is there anything else out there? And is it really thatmuch hard to have a device with att and tmo 3g bands together jeez! Nokia!! Sony!!

  6. The $40/mo Total Internet plan is an _old_ plan, from before the “Even More” (EM) and “Even More Plus” (EM+) plans came about.

    I’d go into a T-Mobile store and see if you can get just the SIM, no device, and avoid any sort of contract (and thus avoid the ETF). That should be workable, since you’re not getting a device.

  7. Long ago I did just this with a Verizon Samsung i730. That piece of crap dropped my calls continuously. So I bought the smartphone and got the PDA data plan ONLY for $50, NO voice.

    Honestly with the consistently CRAPPY call quality at AT&T if they had a data only plan for the iPhone I would have long ago gotten one.

  8. I completely agree with Kevin and many others who have echoed this sentiment. I also don’t have any real need for voice, and would like a data-only plan similar to the T-Mobile one described here. An ETF is annoying, and unnecessary, but I would pay it if it’s the only option. I’m unlikely to break contract, so I wouldn’t pay the ETF anyway.

    However, there certainly need to be more options for data only (and perhaps per-minute “emergency” voice) across all carriers in the US.

  9. medah4rick

    also, i think you can just sign up Even More Plus Plan with just voice at $30 for 500min. then i think you can individually add internet or text on your tmobile account website. internet is probably $20 and text $10 individually. so you can get internet and 500min for $50 with no ETF vs. $40 internet only with ETF. i haven’t confirmed this but i think this is how it works.

  10. Welcome to my world Kevin! :) I’ve been suffering a similar situation now for a few months, except I’m looking at a data-only device to complement a separate prepaid phone I’m using.

    I have two old pocket pc phones that would work great with a data-only SIM for web/email on the go. Back in the day I could get unlimited data for $20 on top of whatever I paid for voice. No can do anymore. My only option right now is the $40 plan you tried tied to a 2-year contract.

    I would have taken a Verizon MiFi – works with netbooks/notebooks as well – but that’s capped at a measly 5GB and costs a hefty $60/month. Uncapped 4G does sound promising, but we’re not there yet as far as devices or coverage is concerned.

    For years carriers have operated on the mindset that steep termination fees and locked-in contracts will keep a customer for them. Nope. If carriers care anything about “loyalty” they would have figured out that it’s offering choice, options and flexibility that bring consumers on board, alongside offering decent quality service. Give us what we want, and we will happily pay.

    I agree that a shakeup is necessary in the US cellphone carrier arena, and I would really like to see a third GSM provider join the market. It’s the non-competitive practices, however, that need changing. Get rid of the caps, eliminate termination/activation fees and make month-to-month options standard. Maybe then US consumers will be open to some real choice and options.

  11. You can actually sign up for that T-Mobile plan without a contract or ETF, but it requires some trickery. Simply sign up for the data-only plan under T-Mobile’s FlexPay setup, and tell them you’re bringing your own equipment. You can pick the $30/mo plan for 300 minutes, and just tell them you don’t have the phone with you at the moment.

    Now, go home and log into your account online, and go to Manage Services – from here, add the $9.99 unlimited data plan, and there you go.

    If you show them whatever phone you’re going to use for this, they’ll force you onto the $24.99 plan for data, so that’s why you have to tell them you’re using something else.

  12. Back to the suggestion to use MiFi, Millenicom (MVNO on Sprint network) offers two data-only plans without contract: $59.99 with 5GB monthly limit or $69.99 unlimited. They carry the MiFi.

    • We could probably do that Bob, but there really isn’t much too it. In lieu of using a Google Voice client (since there isn’t one for the iPhone), I just hit in Mobile Safari. Anything I need to do can be done from there: settings for my phones, initiating calls, reading and replying to SMS message, etc… It’s not as good as some of the native or 3rd party solutions found on other handsets, but there isn’t anything I can’t do with Google Voice on my iPhone 3GS this way.

  13. medah4rick

    you can add the att smartphone plan with only data (no voice at all – you can even block voice). did you try adding it? i use that now with my iphone and with my n85 with joikuspot.

    i heard you can get a prepay sim with tmobile and get the sidekick plan. this plan gives u data and text for $1/day only when you use it. always wanted to try it but i dont have a tmo phone to utilize 3g.

  14. Kevin – I completely agree with what you’re saying. Like you, I’m constantly reviewing hardware for my site – I mainly do Nokia devices, but because I’m a T-Mobile customer..I’m always using EDGE. The N900 that I’ve had since November has been great because it works on T-Mobile’s 3G.

    I too just want a data only line w/o an ETF…..hopefully this will come soon.

    Related post, from ’07

  15. I have a data-only SIM from T-Mobile with no contract. I know they’ve changed their plans, but I couldn’t find this option on their web site when I purchased this SIM, either. I went down to the store and a helpful employee (it helps that I’ve been a regular for years) figured out how to get me a data-only SIM on a month-to-month plan. It’s $39.99/month. So I think it can be done, but only in a store with someone who’s willing to put a little effort into figuring it out.

  16. Kevin, just get a Mifi modem on Sprint or Verizon (Whichever has better reception for you) and be done with it! You can use it for any GSM/CDMA wifi enabled device, plus use it for your Mac/PC via tethering or WiFi. Infact, you can carry multiple GSM devices with wifi and use the same Mifi.

    I have in my bag, iPhone 3GS, Palm Pre, Droid and Nokia Booklet. All except for the Droid (has it’s own data/voice plan) run off the Mifi on a daily basis :)

    • MIFI=ETF though. Not that that isn’t a great way to solve the issue. One that the wife and I are considering.

      Agreed that the US cellphone market is messed up, but the culture for subsidized phone’s and the American idiocy in putting up with it will be hard to break.

      It should be noted that allowing the ETF to sway your decisions further enables the corporate abuse. We can leave ATT for one ETF right now and recoup the savings in 3.5 months on T-Mobile. Sans contract…Or purchase a MiFi with the savings…

      • With Verizon, you can buy unsubsidized devices. You just have to choose a month to month plan when you buy you hardware.

        So, at least with Verizon, an ETF doesn’t necessarily apply, as long as you’re willing to foot the unsubsidized price for the hardware. In the case of the Mifi, Verizon’s price, sans contract, is 269… not bad.

    • David, that’s certainly an option and I’ve recently considered it since I’m in the last month of my 24 year contract with Verizon for my 3G USB stick. But in the end, I’m not sure it’s the ideal situation for my intended use. There are times when I simply want to leave the house for the day with a phone and no computer. I’d have to remember to take the MiFi with me, which isn’t a major issue, but if I’m using it for VoIP, I have to make sure it’s on and also watch the battery life since it only offers 4 hours or so. And if I want to be reachable via VoIP, which I often do, it will require the MiFi with me and on all the time.

      Aside from that, it’s really a workaround to the coming problem of data reliance. Maybe it isn’t an issue now, but as voice becomes just another type of data, I think we’re going to need data-only SIMs and plans.

      • That doesn’t mean you couldn’t buy it outright on T-Mobile (if they offer one), like with the EM+ plans and phones. Or buy one unlocked/unbranded and use it with a T-Mobile SIM card.

        We just need Novatel (?) to make one that’s T-Mobile-USA 3G compatible.

    • Battery life with the MIFI is a killer issue. You have to leave it on all the time or you won’t have a data connection. That means no incoming texts, emails, etc. The battery life is very poor compared to a modern smartphone that will go at least a day, maybe 2 in standby mode.

      • I don’t mind the battery issue. And, really, I don’t actually need a Mifi per-se. What I want/need is mifi-like functionality. T-Mobile needs to get their heads out of their butts and realize that Tethering will only get them more revenue, and then allow their Android phones to have tethering apps (of all types: BT DUN, BT PAN, USB, and Wifi/Mifi). Then add a Mifi device, and play up their compatibility with Cradlepoint Routers with the Webconnect dongles (or cary a branded one, like Sprint does) (right now Cradlepoint supports them, but without official support/blessing from T-Mobile, as far as I recall).

        If my G1 could do wifi tethering, I wouldn’t mind the battery impact. In fact, I’d probably be carrying a battery booster that could be used with either my netbook or tablet anyway … and that could just as easily keep my G1 fully charged while it’s acting as a wifi access point.

        Worst case, I could do wifi tethering or USB tethering, while it’s hooked up to (and charging off of) my netbook or tablet. That would be less than ideal, but it wouldn’t hurt my feelings any.

        (and, existing solutions, like PDAnet for Android, or the one that is just a USB web proxy, don’t work for me — I don’t use windows, ever; and I need more than just a USB web proxy, for ConnectBot/ssh … nor am I interested in rooting my phone)

  17. There is an express card, Option GlobeTrotter® Express 442, and a USB modem, Option iCON 452, which has 3G for both AT&T and T-Mobile. Those devices are the ones I would consider if I wanted data-only and wanted the freedom to choose any US or European provider.

    I have a “data-only” sim from AT&T that I got years ago so it doesn’t have the 5GB cap and I’ve thought about trying to use it for VOIP only calls if I can find the right device for it.

  18. Ken Wenzel

    Look at Cricket. That won’t get you a sim card, but it will get you a no contract all you can eat 3G Broadband card for $40/month and no contract. Right now the 3G Broadband modem is selling for $50 with a $50 gift card rebate.

  19. I was running into this same exact issue last week. I would like to find a data only plan on a GSM network so I can easily switch phones.

    The only reasonable plan out there is Sprint Relay for 29.99, unlimited data, free text, no phone calls. This is meant for the hearing impaired but I went through the checkout process with out ever asking if I was hearing impaired. The problem is that its CDMA which means no SIM, and no Nexus.

    • You hit the nail on the head in my case — Sprint is CDMA and most of the phones / devices I use or review are GSM. When we get a CDMA device for review, we’re generally provide service during the review period as well, so a CDMA data-only plan doesn’t buy any flexibility. :(

  20. notarichman

    i’m still looking for a laptop (for the big keyboard) that can be used for: cellphone, texting, web access through 3g, 4g, and wifi, gps with assoc. programs and loadable maps for terrain, and blue tooth.
    i know you can use skype for calls, but how about all the apps?

  21. I COMPLETELY agree with the author. This is exactly what I want to do as well. I’m currently “in a relationship” with AT&T for my Blackberry Bold. Know how many voice minutes I used last month? 13! And that was a busy month.

    I just don’t have a need for a cellphone. I do have a GREAT need for email and internet on my device. The US cellular market is antiquated at best. Times are changing and the cell providers are not changing with the times. Sure, they have data plans; but as Kevin wrote, they’re in addition to the voice service. You’ll laugh at this; but the PEEK email device is actually a brilliant concept. For as little as $15 a month you can get unlimited email. That’s awesome! But it has no internet capabilities which is a deal killer because I have to have access to the web.

    I seriously think that the first carrier that would do something like this would OWN THE MARKET! There are a lot of data only users out there!

  22. Data only is not viable yet. I certainly don’t want to lag around multiple smartphone devices but just one. Until HSDPA is widely accepted as currently 2G is there is no talk about data only smarphone sim cards.

  23. I generally liked this entry, but disagree with one point: ” These days, the voice component of a smartphone is more of a necessary add-on rather than the primary function.”

    I’d venture to guess that the vast majority of smartphone users also use the phone for voice. I’d further venture that only the geekiest among us use VOIP on their smartphones (I don’t actually), or carry more than one device unless the second device is a work cell phone.