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Tracfone operates with top-up cards, much like long distance calling cards. After purchasing a phone, customers purchase cards that provide a prescribed number of minutes. There is no consistent per-minute rate for Tracfone cards, so customers who make larger purchases benefit more. Rates for the two lowest denomination cards, 30 and 60 minutes, work out to 33 cents per minute, or far more than any other prepaid wireless service. Even the 450 minute card, sold for $80, works out to almost 18 cents per minute.
Launched in 2005, Net10 has the perfect gimmick. Instead of Tracfone's fluctuating rates, it offers all calls at 10 cents per minute. There is no discount for purchasing more expensive cards, and no double minute card to enhance purchases. For every dollar consumers spend, they get 10 minutes. Text messaging is also cheap with Net10, at 5 cents per message, both incoming and outgoing. So not only are the Net10 rates simpler than Tracfone's, but the rates are greatly cheaper. As long as Net10 offers coverage, consumers would be wise to use the cheaper service.
Tracfone's latest offering comes in response to the recent trend of flat-rate, unlimited plans. The company launched Straight Talk prepaid in the summer of 2009 to much fanfare. The soft launch featured just one plan, providing 1,500 minutes, 1,500 SMS and MMS, 30MB of data, and unlimited 411 for $30 per month. Once in full launch, Straight Talk added an unlimited voice, messaging, data, and 411 plan for $45 per month. Once it gained distribution at Wal-Mart, Straight Talk was a hit. Again, its rates are far, far cheaper than the parent Tracfone service. Only customers who don't plan to spend $30 per month should consider anything other than Straight Talk, and even then Net10 provides a better value than Tracfone.
Using the $30 price point as an example, Tracfone gets you far, far less than its subsidiaries. With Straight Talk a consumer gets 1,500 minutes and 1,500 messages. With Net10 a consumer gets 300 minutes, or 200 minutes and 200 text messages. With Tracfone that same $30 gets a consumer only 120 minutes. Again, it asks the question of why anyone would choose Tracfone over its subsidiaries. A dollar just doesn't go as far.
Tracfone does offer one way to get a cheaper rate. Their Double Minutes For Life card does just that. For a one-time $50 fee, customers can essentially cut Tracfone's rates in half. Of course, this still doesn't work with the smaller denomination cards. Yes, the 60 minute card for $19.99 would provide 120 minutes, but that's still a rate of 16.6 cents per minute. The only way to get surplus value out of Tracfone is to purchase the Double Minutes card and then a 450-minute card for $79.99. That provides a rate of 8.8 cents per minute, which is lower than Net10. But, because of the $50 Double Minutes card, that becomes 14.4 cents per minute. The true rate doesn't fall below 10 cents per minute until the customer purchase three 450-minute cards.
(Note: The Double Minute cards, at the time of this writing, is on sale for $24.99, though the regular price remains $49.99.)
Even with its Double Minutes offering, Tracfone requires a large cash outlay in order to achieve rates even approaching Net10. At that point, Straight Talk offers a much more robust plan at a far, far lower price point. Customers who plan to purchase the Double Minutes card and then purchase only 450-minute cards might find value in Tracfone. Most consumers, however, would benefit more from Net10's lower, predictable rates, or Straight Talk's large minute and message allotments. It appears at this point that the Tracfone brand remains only for name value. Its subsidiaries offer much, much better deals.
