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TheStreet Open House

The End of Smartphone Contracts

There are other alternatives as well. You can trek over to Wal-Mart (WMT), which resells T-Mobile service with a twist: If you don't make many calls, opting to use your smartphone mostly for data, it offers an unlimited data plan for $30 per month. It also throws in unlimited SMS and 100 minutes of circuit-switched calling per month.

It doesn't take a mathematical genius to show that with this $30 unlimited data plan such a customer would be saving even more than the $1,080 example with StraightTalk above. Another reseller offering similar deals to StraightTalk is MySimpleMobile.

You can buy unlocked smartphones from Google (GOOG), Apple (APPL) and Microsoft.

Yes, they cost $200-$450 more than they would if you took the subsidy, but as I show in these examples you make that back in about a year, typically less.

There are additional benefits as well. Buying an unlocked phone, you can pop any SIM card into it when you travel abroad. This could save you literally hundreds of dollars per day when you're on the road.

Starting sometime down the road even here in the U.S. the benefits of an unlocked phone could be even greater, even if you never travel abroad. Already SMS is free for whomever bothers signing up with Google Voice. So you don't need to pay AT&T or Verizon $20 per month for the privilege. The fact that the U.S. consumer hasn't bothered to do this to a greater degree speaks to the laziness and ignorance of the U.S. consumer.

More importantly, voice and video communications are also becoming essentially free with variants of VoIP (Voice over Internet Protocol). Applications ranging from Skype to Google Voice to GoogleTalk to iMessage to FaceTime now do much of why you otherwise pay a carrier $50-$70 per month to perform in terms of "unlimited domestic calling."

The new VoIP alternatives are not limited to domestic calling. I don't think I have paid a penny for an international call in five years using these various calling programs that are free.

What does this mean over the next one to two years? Starting soon, you might want to buy data-only plans for perhaps $30 or less, per month, as you don't need any calling plan or SMS plan. This way, you will most likely save even more than $1,080 over two years, compared to today's pricing of "all-in data/SMS/voice" plans from AT&T and Verizon.

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