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Virgin Mobile Broadband: Why Contracts are better than Pre-Paid

I have heard it a million times.  ”I hate contracts – do you have anything with NO Contract?” Well let me tell you from experience there are some very good reasons you should want a contract.  Sounds Crazy right?  Let me offer some examples that might change your mind.


First objection:  ”I don’t want to be stuck in a contract for 2 long years.”  This is a complete myth. You are not “stuck” at all.  Basically the carriers are typically giving you a $200 discount on your device when you sign up for 2 years.  IF you decide you want to cancel after 7 months, fine.  Cancel it.  The termination fee for Verizon is $175 and $200 for Sprint.  Essentially you are paying for the device AFTER your usage rather than before it.  You just got free financing for as long as you were on contract!  Why not give yourself the CHANCE at a free device if you happen to keep it for the 2 years?  If you pay $200 for a pre-paid device at the start, you have zero chance of getting it free. Would you go to Vegas with zero odds?

I would only consider pre-paid for one of two reasons:

1) If you know for a fact you only need it for LESS than 6 months, and just for very limited usage, as that is all most pre-paid plans allow for a decent price.

2) You have horrible credit and don’t qualify for a regular plan.  Even in this case, I would recommend paying the deposit if you can to get the better deal (and start repairing your credit at the same time).  After all it is a deposit, and you will get it back.

The reality is most Pre-paid plans suck. Or will soon.

Virgin Example:  a virtual BAIT AND SWITCH!

Virgin Mobile Broadband is a perfect example why you want a contract where your plan won’t get pulled out from under you. With much fan-fare Virgin launched it’s “Unlimited” Mobile Broadband with No Contract for just $40 a  month!  Wow, that sounds like a fantastic deal on the surface.  But look at what happened with the timeline below. Since it’s pre-paid, Virgin (or any other pre-paid service) can change it’s plans at any time with no recourse for those who spent $150 on a new device.

Aug 24, 2010 Launch:  Unlimited, $40 a Month! No Contract!   WOW! Best Plan EVER!

Jan 11, 2011 5 Months Later:  5GB Cap installed (speed throttled to 256K after 5GB), $40 a Month!

Feb 15, 2011 1 Month Later:  2.5GB Cap installed (speed throttled to 256K after 2.5GB), plus increase the price to $50 a Month!   And a 256K speed limit?  Remember Dial Up?  Good times!

In the course of 6 short months, the deal changed 2 times, with each dramatically worse  than the original. So instead of Unlimited (3G only) service for $40 a month,  it’s now $50 a month for just 2.5GB!  Compare that to Verizon 4G with speeds 10 to 20X faster, and twice as much data for the same $50.  Contracts aren’t looking so bad now, are they?

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