Return to site

How to Save Money on Cell Phones

How to Save Money on Cell Phones

Posted on by Jon Colgan.

The first thing you need to do–if you’re among the 93% of the US still doing business with one of the four Big cell phone carriers–is resolve to switch to a better carrier with thinner margins.

You probably know already that the wireless ecosystem consists of two types of carriers: big ones and small ones, or top-tier and 2nd-tier. Did you know, on average, the 2nd-tier carriers earn 1/5 the margin as the top-tier carriers? For our purpose, this is an apples-to-apples comparison because the 2nd-tier carriers use the exact same wireless networks as the top-tier carriers because the 2nd-tier carriers lease it from the top-tier carriers. Exact same network yet 1/5 the margin–why?

Top-tier carriers are perennially ranked among the most despised companies in the US. So they have to spend a ton of money on customer retention and customer acquisition–burning beau-coups of customer service man-hours putting out fires to keep existing customers happy and to shelling out mountains of cash to get prospective customers to forget about all of the reasons consumers consistently despise them. In short, top-tier carriers offer consumers a terrible value proposition–expensive rates, unremarkable coverage, rude customer service, long-term contracts, etc.–and it’s expensive to distract current and prospective customers from all of that.

2nd-tier carriers don’t have these problems. So their cost of keeping and acquiring customers is far less. 2nd-tier carriers can earn 1/5 the margin and still be profitable. As Method Savvy founder Jake Finkelstein says, “The proof is in the pudding.” What’s the best test of a carrier’s value proposition? Whether or not they require long-term contracts. Most 2nd-tier carriers don’t require contracts, which indicates that they’re confident in their value proposition. By contrast, the millions of dollars top-tier carriers are spending and the long-term contracts they require suggest that they’re scared to death. And they should be, because top-tier carriers have little reason for confidence in their threadbare value proposition.


Once you resolve to switch, the last step is to stop by and let us know. Then we can have you out of your contract in about a week.