Q: I'm shopping for a new phone plan for my family. Is an unlimited data plan a good option?
A: On paper, unlimited data seems like a great deal. You can use your smartphone as much as you want and you'll never be charged for overages. Something about the word "unlimited" makes the plan seem more valuable. You'll never have to worry about exceeding your data caps again.
However, cellphone companies are starting to take advantage of the power of that word. T-Mobile let the charge with a $70 per month (plus taxes and fees) unlimited data plan. AT&T and Verizon both followed suit with the $100 and $85 per month (again, plus taxes and fees) unlimited plans. No matter what carrier you use, you'll likely have the option to sign up for unlimited data.
Once you drill down a bit, though, unlimited data plans aren't all they're cracked up to be. Before you lock yourself into an expensive long-term contract, ask yourself these questions. You might end up saving some money!
1.) How much data do I actually use?
The average smartphone user needs between 2 and 3 gigabytes of data each month. That includes email, some web browsing, and occasional music streaming. If you don't use your smartphone for business and usually use the Wi-Fi for video streaming, this is probably a fair estimate of how much data you use. We frequently overestimate our data usage. Streaming 35 hours of Pandora music, for example, takes up just under 1 gigabyte.
Of course, you don't need to estimate. You can go back through your old bills and calculate your average monthly data use. that will take into account your specific habit and the habit of your family.
If your usage is more in line with the average, a 3-4 gigabyte plan will be plenty of bandwidth for your phone. These plans are usually about 30% cheaper than the comparable unlimited plan, which is a significant savings. According to one analysis, the savings of an unlimited plan won't become apparent unless you're using more than 10 gigabytes per month.
Of course, for a family of four, you need to take into account everyone's data usage. The average family of four consumes about 12 gigabytes each month. That can be enough to make the unlimited plan worthwhile.
2.) Could I change my data usage?
If you find yourself regularly busting through your monthly allotment of data, an unlimited plan can seem very attractive. However, it might be smarter to change your habit instead of changing your plan. Making just a few changes can let you keep a more affordable plan and stay within your data limits.
If you're a regular Spotify user during your morning commute, download your playlist to your phone using Wi-Fi and listen data-free. Lower your video streaming quality, especially if you use an app like YouTube for music. You can also set your phone to only download system and app updates when connected to Wi-Fi. Making these changes might make staying with a lower cost plan more realistic.
3.) Can I rely on smartphone data exclusively?
There may be people who just can't kick the data habit. Maybe you use your cellphone extensively for business, or maybe you live in an area that doesn't yet have high-speed internet access. If that's the case, there might be other cord-cutting strategies you can use to reduce your total monthly expenses.
If you don't use the internet much at home, but need your data on the go, it might be worth considering cutting your household internet and relying on mobile data all the time. Wireless hotspot devices that broadcast a Wi-Fi signal and use your mobile data subscription are available for around $50.
If you consider this plan, not that no company is really unlimited. Expect to see slow-downs in service after you've used 20 gigabytes in a month. If there is a lot of internet use in your household, you might bust that cap pretty quickly.
Whether an unlimited data plan is right for your circumstances or not depends on how much data you use now, and how much that data use can be curtailed. If there's no way around an unlimited data plan, there may be other ways to get the most out of your service.