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Published: November 2013

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It’s difficult to understand the true cost of a smart phone. In the quest by major wireless carriers to reduce the up-front costs of those pocket-sized computers, they advertise heavily discounted phones, then lock customers into expensive, long-term service agreements and push them to overbuy data plans. Many customers are so bewildered with the buying process that they renew with their existing carriers as a matter of course.

In the annual Consumer Reports National Research Center survey covering more than 58,000 subscribers in 23 metro areas, most respondents stayed with their provider more than two years, the length of a standard contract, even though only half were highly satisfied. And with each new contract, customers are induced to abandon perfectly serviceable phones in favor of newer, more advanced models. “Wireless service has always been one of the most complex purchases a human can possibly make,” says Eddie Hold, a wireless industry analyst with market research firm NPD Group. “It’s always been horrific.”

But the landscape is changing. The two-year contract is under assault. Larger carriers such as AT&T, Sprint, and Verizon also contract-free services. Meanwhile, T-Mobile, the smallest of the big-four carriers, has dispensed with contracts for service and has decoupled the cost of the phone from the cost of service. Yet T-Mobile still allows customers to spread out the cost of a phone over a 24-month period. AT&T and Verizon now offer similarly structured “installment plans” for phones that allow customers to upgrade their device after six months or a year, though they don’t discount their monthly service the way T-Mobile does.

It all sounds pretty confusing, right? Consumer Reports can help you navigate through the maze of costs and pricing for your smart phone (or phones). We offer detailed Ratings of U.S. cell phone carriers and city-by-city Ratings of the best and worst carriers, and more.

Editor's Note:

This article appeared in the January 2014 issue of Consumer Reports magazine.

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