Your Cell Phone: An Owner's Manual

Are you paying for minutes you don't use? Might a prepaid plan make more sense? Here's a 10-point guide to wireless wisdom

By Amey Stone

When you bought your first mobile phone all those years ago, probably all you cared about was being able to make and receive phone calls on the go (a promise still often unfulfilled). Now you can use your cell phone to play video games, take pictures, watch TV, or listen to downloaded music. Soon, you'll be able to use it in stores as a handheld scanner to make purchases (see BW, 6/21/04, "The IT 100: Wireless").

All these new options come with their own additional sets of challenges -- and charges. But if you're after basic phone service, the good news is it's getting simpler -- and cheaper. And if you stray from your plan's provisions, the fees are now less usurious. Whether you're thinking of upgrading your phone, changing service providers, or dropping your landline altogether, here are 10 cell-phone industry secrets you should know:

1. Some amazing new services are available -- but they aren't always that simple to figure out.

Camera phones are all the rage. But rather than use them to send pictures to friends and family everywhere, most people just take pictures and store them, says Martin Dunsby, vice-president of wireless consultancy InCode Telecom. "The challenge of most data services is ease of use," he points out. So before you buy a newfangled phone with the idea that you'll use it to play games, download songs, listen to the radio and -- yes -- e-mail photos, get ready for a steep learning curve -- or think twice about buying the fancier phone.

2. Don't be afraid to give the salesperson a workout.

You can't buy a cell phone like you'd buy an electronic toothbrush. When deciding on a model, get the salesperson to walk you through the steps it takes to send a photo or download an MP3 file. If you don't find the user interface intuitive enough, try another phone. Check out accessories, such as the headset, charger, and case. Will it synchronize with your computer? Do you need it to?

After you've decided on the service plan and the phone you like best, says Dunsby, ask the salesperson to set it up for you and show you how to use the key features.

3. Companies push extras like ringtones, instant messages, and gaming because they make extra money from these add-ons.

Paying $2 to have a clip from the band OutKast play when you get a call may seem like a waste to you, but plenty of young people consider it money well-spent. That's music to the ears of the service providers: The "global mobile audio accessory" market is now worth $2.5 billion a year in sales, according to research firm Yankee Group.

On June 9, Verizon Wireless announced that downloads on its "Get it Now" service -- games, instant messages, ringtones, and digital-photo applications -- totaled 34 million from January through the end of May. Can anyone say "generation gap"?

4. Light users should consider going prepaid.

If all you want is a cell phone to make and receive occasional calls, the best plan may be none at all. Prepaid phone providers Boost and Virgin Mobile have enjoyed tremendous success by offering affordable, flexible, easy-to-understand plans that make sense for someone who doesn't have a cell phone glued to their ear. On June 10, Verizon (VZ ) followed suit with a new pay-as-you-go plan for 35 cents for the first minute and 10 cents each minute after.

5. That big bill may not be your service provider's fault.

When your $40 plan ends up costing you $50, it could be because of government and regulatory charges, points out Tole Hart, principal wireless analyst for research firm Gartner. For example, carriers are required to offer location-based 911 services so the emergency dispatcher will know how to get help to you even if you don't know quite where you are. But most companies pass those charges through to customers. That's another way prepaid plans may be cheaper than they seem -- those fees and taxes are bundled in the per-minute rate, Hart points out.

6. You can move your phone numbers any which way you want.

Thanks to legislation passed last year, you can now retain your cell number when changing service providers. You can also have your home phone number converted to your wireless plan if you want to drop the landline. "You can even take [your] number with you to another state, as long as it's on a cell phone," says Hart.

Be forewarned, though: "Number portability still isn't a perfect experience," says Hart. "All the kinks haven't been worked out."

7. Make full use of the trial period.

Most carriers offer a 30-day trial period during which you can return the phone and get your money back. That's your opportunity to make sure you have coverage at home, work, and wherever else you typically go.

Most carriers offer good coverage outdoors in all urban areas. "The differences come when you're inside the buildings," says Dunsby. So test out the coverage early on, and if you find yourself constantly moving toward a window when you're on your phone, try another carrier.

8. Internet-enabled phones make more sense than you think.

The idea of surfing the Web via cell phone once seemed silly. Now, Web applications are becoming more useful, says Farren Ionita, an independent wireless consultant in New York City. For example, if you get a call from a number you don't recognize, Infospace has a reverse lookup feature that will give you the name and address of the person calling. The site also offers a way to search for a specific type of business within a mile of any location. That can be a great way to find a shoe-repair shop in a pinch.

9. Pricing is getting fairer.

In an effort to improve customer-service ratings as well as to stop users from migrating to the easy-to-grasp prepaid plans, cell-phone companies are making their plans more user-friendly.

Sprint (FON ) has introduced its Fair & Flexible plan that allows customers who exceed the minutes on their plans to automatically purchase additional time at more reasonable rates. And Cingular allows customers to roll over unused minutes into the next month, says Hart. Both are examples of companies altering past billing practices that generated complaints, he says.

10. You still need to read the fine print.

Startup fees, early cancellation penalties, and rate hikes when contracts roll over haven't gone away. As you trade up to a sleek new mobile phone, don't forget to put on your granny glasses and read the contract carefully. It will prove time well spent before you start downloading those OutKast ringtones you've been hankering for.

Stone is a senior writer for BusinessWeek Online in New York

Edited by Patricia O'Connell

Before it's here, it's on the Bloomberg Terminal. LEARN MORE