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5 Reasons Why You Might Want an 'Unlocked' Smartphone

August 16, 2013
URL: http://www.entrepreneur.com/article/227865

Chances are your smartphone is "locked," meaning the software on it prevents you from using it on any other wireless network except for the one you signed a contract with when you purchased the mobile device. But wouldn't it be more convenient, and potentially less costly, if you could use the smartphone you paid for on the wireless network of your choice -- while slashing your phone bill at the same time?

You can, if you're willing to purchase an "unlocked" smartphone.

Lately, carriers have begun offering substantially less expensive plans for smartphones, especially prepaid plans which can cut a typical monthly wireless bill by half or more. But can you use your current smartphone on a no-contract, prepaid plan? If you bought your smartphone from your current carrier under a two-year contract, that answer is almost certainly no.

While it's technically possible to unlock most handsets, as of this year the U.S. government made it illegal under copyright law to unlock your cell phone without carrier consent. The House of Representatives is considering a bill that would once again make it legal to unlock a carrier-locked phone. But mere illegality hasn't stopped Americans from unlocking their cell phones and this activity appears to be more popular than ever in the U.S.

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If you don't want to deal with the hassle and risk of unlocking your phone, right now it is completely legal, and easier than ever, to buy an unlocked version of almost any smartphone: one that isn't restricted to a specific carrier.

Here are five reasons why you might want to buy an unlocked phone:

1. There are more, easier ways to buy unlocked phones.
You can now buy an unlocked version of almost any smartphone direct from the manufacturer (with a warranty) online and have it shipped to your door the next day. Online and brick-and-mortar retailers such as Amazon and Best Buy sell many unlocked phones.

Typically, unlocked smartphones can cost about twice what you'd pay up front for a contract phone: $600 to $750 for high-end current models with at least 32-GB of storage. But in the end you can recoup this cost difference several times over.

2. They can save you money in the long term.
Most two-year wireless contracts for smartphones cost about $80 to$120 per month or more, depending on how much data your plan provides. That can add up to nearly $3,000 over the life of a contract.

In contrast, a pre-paid or month-to-month no-contract smartphone plan can cost as little as $35 to $40 per month -- such as Virgin Mobile's Beyond Talk unlimited data and text plans. No-contract options can even be far less expensive than new offers such as T-Mobile's new upgrade-anytime plan

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If you use Wi-Fi for mobile data most of the time, consider a plan with a low data cap. Also, you won't ever have to pay an early termination fee on a no-contract plan -- something that can cost several hundred dollars under a standard contract.

3. It has become easier and more lucrative to sell your used phone.
If you buy an unlocked phone and want to upgrade in a few months or a year, often you can get a reasonable price by selling your used unlocked phone online, especially on eBay. For instance, an unlocked, one-year-old Samsung Galaxy SIII smartphone might sell on eBay for $350 to $450.

In contrast, a carrier-locked version of the same phone would be much harder to sell and probably would fetch only $150 to $200. There are also phone resale services such as Gazelle.com which can be easier to use but pay far less than direct sales on eBay.

4. They're useful for international travel.
If you travel internationally, having an unlocked smartphone can be a significant money-saver and logistical advantage. Be sure to purchase a phone that uses GSM technology (the world standard outside the U.S., and is the type of network used by AT&T and T-Mobile here), which means it has a removable SIM card. Then purchase a local prepaid SIM card when you get to the country of your destination for more affordable local phone service and data.

This avoids the hassle and expense of renting a new local phone and figuring out how to use it. Roverly offers a free online guide to choosing an international smartphone.

5. Freedom to make your own choices.
We saved this one for last and it should seem like the most obvious. If you're sick of the stranglehold wireless carriers have had on the U.S. mobile market, buying an unlocked phone can be an act of protest that hits the carriers where they live.

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