Prepaid cellphones offer inexpensive alternative to contracts

Right about now, Illinois Governor Rod Blagojevich probably wishes he used a prepaid cellphone instead of his home phone when discussing that empty seat in the US Senate. He might have avoided an embarrassing federal indictment, while saving money for his legal defense fund.

That's because prepaid cellphones can be bought for cash at many retail stores, without providing ID. They're an excellent choice for anyone looking to avoid those pesky federal wiretaps. But with the economy in recession, everyone should consider prepaid cellphones as a cheap alternative to the two-year contract plans offered by most cellphone providers.

The New Millennium Research Council, a think tank funded by the telecommunications industry, says 29 million American adults rely on prepaid cell service, but that another 25 million cell users could lower their bills by switching to prepaid.

Early prepaid services featured absurdly high fees. Many would charge customers a dollar a day, even on days when they didn't place a call. That was $30 a month, on top of a per-minute fee when the phone was used. Prepaid services also saddled users with primitive, obsolete phones. Indeed, the prepaid plans had just one advantage - you didn't need a credit card to sign up. So prepaid plans were mainly used by poor folk, cash-strapped teenagers, and the occasional hoodlum.

Today's prepaid plans make financial sense for anybody who uses a cellphone for just a few hours a month.

You can switch carriers easily enough, while keeping your present number. You'll probably have to buy a new phone, but prepaid companies offer lots of low-priced handsets; some are even free, after rebates. Pay a little more, and you can get a phone with attractive extras like built-in cameras and GPS navigation chips.

You can still find lots of dollar-a-day prepaid plans, but generally they only charge you for days when you use the phone.

In addition, such plans offer a fairly low calling rate of 10 cents a minute. Cellular carriers Verizon Wireless, AT&T, and T-Mobile offer such plans.

But you can do better with "pay-as-you-go" services. The plans charge a higher per-minute rate, but you pay only for the phone itself and the amount of airtime used.

Additional minutes can be purchased with a credit or debit card over the Internet, on a phone or with cash at thousands of retail stores.

AT&T and T-Mobile offer pay-as-you-go plans, but AT&T charges a steep 25 cents per minute, with no discounts for buying more minutes. T-Mobile has a more sensible deal. Ten dollars buys 30 minutes of talk time - a costly 33 cents a minute. But for $25, you get 130 minutes - about 19 cents a minute - and $100 buys 1,000 minutes at a dime each. Minutes expire after 90 days, but if you buy more on-air time before the deadline, you can keep the old minutes.

A rival offer from Virgin Mobile charges $20 for 100 minutes of airtime, or 20 cents a minute. These minutes also expire after 90 days, but are renewed if more are bought. If you're a heavier phone user, Virgin offers a sweeter deal. Twenty dollars buys 200 minutes, but the minutes expire after just 30 days unless you buy more. So talk fast.

Another good plan comes from Boost Mobile, a prepaid service run by cellular carrier Sprint Nextel Corp. Boost's Paygo Basic charges a dime a minute no matter how many minutes are purchased. And it allows 90 days to buy more time and retain leftover minutes.

Don't expect an Apple iPhone or the latest BlackBerry when you buy prepaid service. Many of the available phones are bare-bones gadgets with few extras, though that's hardly a drawback for users who just want cheap phone service. But prepaid vendors now offer a fair number of stylish, versatile handsets.

Virgin Mobile offers the Slash, a lightweight phone from South Korea's Samsung Group, for $79.99. It's an attractive device with a slide-out keypad, a built-in camera, and support for a Bluetooth wireless headset. Boost Mobile lent me the i776 phone from Motorola Corp. Priced at $100, this phone has GPS capability, as well as a camera and Bluetooth support. In addition, the i776 offers access to Sprint Nextel's push-to-talk service, giving walkie-talkie access to your best buddies.

Remember, using these extras will jack up the bill. You must buy messaging minutes to transmit photos from a phone, or to send SMS text messages. The push-to-talk feature from Boost costs an extra dollar a day. And Boost Navigator, the available GPS navigation program, costs $1.99 per day of use, or $9.99 a month. Besides, Boost navigator isn't as powerful or easy to use as alternatives like Verizon Wireless' AAA Mobile or VZ Navigator programs.

Still, with falling prices and fancier phones, prepaid cellular plans are looking pretty good these days. Especially to Governor Blagojevich.

Hiawatha Bray can be reached at bray@globe.com.