Consumers grumbled when> cellphone companies first started requiring a data plan to go along with "voice minutes." But now that smartphone owners are more likely to use their phones for texting, email, taking photos, playing games anything, basically, but talking those data plans could be the key to saving $500 or more on your annual cellphone bill.
As perhaps one of the unintended consequences of allowing outside developers to make programs for smartphones, a number of apps now let users avoid calling and texting charges. Skype, which lets users make voice calls to other Skype users for free, can now be found on a quarter of all iPhones, and its use on all phone platforms more than doubled in the second half of 2010. Instant messenger apps, which can act as a text messaging service, held at least one (and often several) of the top 10 spots in Apple (AAPL),
For strategic users, the growing popularity of apps like these could lead to lower phone bills. By swapping a texting plan for an instant messaging program like Yahoo! Messenger or even Facebook could save the parents of a text-happy teen up to $240 per year. Using Skype or another calling service and scaling back to a smaller bucket of voice minutes could save another $240, with bigger savings for people who often call internationally, says Todd Day, an industry analyst for Frost & Sullivan. Someone who spends an hour each week talking to relatives in Canada could save an extra $22.60 a month per month by forgoing Verizon's (VZ)
Of course, these apps aren't flawless. Voice apps use Voice over Internet Protocol, or VoIP, technology, which transmits your voice as data over an existing internet connection, either the carrier's data network or WiFi. But a slow data network can interfere with call quality. So can a shaky internet connection, and both are common problems, especially for international calls. "[VoIP] is relatively painful and unreliable," says Schwark Satyavolu, the president of plan comparison site BillShrink.com. "It's not first-class voice service."
Instant messaging apps, on the other hand, are less buggy, and eliminate the character limits of texting. They're similar to text messaging software, and to desktop IM software consumers are used to, with bursts of text or even voice popping up on your phone. But they often come with ads -- which users can typically banish for a one-time fee of up to $5. And for a messaging app to work, and for a voice app to be free, both people in the exchange have to be signed up with the same service. That's tricky: Apps aren't necessarily available on all platforms, and forget about connecting with the two-thirds of cellphone owners who don't have a smartphone. "The beauty of traditional voice and text is that you can call and text anyone," says Don Kellogg, a senior manager of research and insights for Nielsen's telecom practice.
As it is, the savings could be short-lived. Phone companies aren't likely to eliminate voice plans completely, whether customers use them or not. And eventually, data will get more expensive. A Verizon spokeswoman says the company plans to start charging users based on how much data they use "at some point," but declined to divulge specifics. Other networks are likely to follow, at which point consumers using apps as a substitute for voice or text could easily see their bills rise, especially if they also stream video or use other data-heavy apps. "We always advise users to keep an eye on their data usage," says Jen Harvey, a co-founder of Voxilate, whose app HeyTell sends voice messages (like the two-way radio technology of Sprint's Push-to-Talk feature) at an average 10KB data apiece. (That's roughly the size of a single email.)
In the meanwhile, consumers who are willing to put up with the occasional choppy call or ad-interrupted text message chain could save almost $500 per year -- enough to fund that new iPhone and 10 months of the required $30 unlimited plan, which Verizon has said it will soon discontinue. "It's another reason to get in on the unlimited data plan while it still exists," says Day.