December 3, 2008 / 5:11 PM / 11 years ago

Cutting costs but still want a fancy phone?

NEW YORK (Reuters) - The U.S. economy’s worst crisis since the 1930’s depression may have some consumers questioning the wisdom of buying a fancy new cell phone just yet, but those who can’t wait just might find some deals out there.

Research In Motion's BlackBerry Curve 8300 is seen in this undated RIM handout photo. REUTERS/Research In Motion.

Now that cell phones are more of a necessity than a luxury for most, the questions are: Which one to buy? How many fancy features do you want? And which service provider fees can you afford?

While iPhone, BlackBerry Storm and G1 may have a higher profile, bargain hunters may instead look this holiday season at less famous smartphones such as Centro, BlackBerry Curve and the BlackJack II.

The latest devices with touch-screens or computer-like keyboards seem a lot more affordable than last year, as AT&T Inc set a new benchmark for so-called smartphones with a $199 price tag for Apple Inc’s latest iPhone.

But smartphone buyers also need to examine the service fees they’ll have to pay for two years, as phone discounts come in exchange for a commitment, as carriers look to recoup the portion of the phone’s cost that they shoulder.

Also, operators won’t sell you some smartphones unless you commit to a monthly fee for data services such as Web surfing, which take advantage of the phones’ computer-like features.

“It is not just the price of the hardware, as 2-year data rate plans are the bigger issue, especially when consumers are worried they may not have a job in the coming months,” said Gartner analyst Hugues de la Vergne.

For example, AT&T makes iPhone users sign up for a data service plan costing them at least $30 a month for unlimited Web access as well as voice services. It costs another $5 for 200 text messages or $20 for unlimited texting.

In contrast, buyers of other devices sold by AT&T can get unlimited Web access and unlimited texting for $35 a month.

De la Vergne sees the BlackBerry Curve from Research In Motion Ltd as a good cheap option. The device, sold by the top 3 U.S. carriers for $99, works well for messaging but does not have third-generation (3G) high-speed Web links.

“A normal consumer may not need the bells and whistles of a 3G smartphone if they’re just looking to casually check email,” de la Vergne said.

Curve sells for $100 at Verizon Communications Inc’s and Vodafone Group Plc’s Verizon Wireless and Sprint Nextel Corp and for $80 at AT&T. Analysts also pointed to Samsung Electronics Co’s BlackJack II, which sells for $80 at AT&T.

Other options could include Palm Inc’s Centro, a device with a tiny Qwerty keyboard and Web access that Sprint is giving away for free after a rebate until January, to customers who sign up for a two-year contract online.

Current Analysis analyst Avi Greengart sees Centro, BlackJack II and Curve as “good entry level smartphones.”

Of course, if you’re really serious about cutting costs, you may give smartphones a swerve altogether and look at a more basic phone with prepaid wireless services.

While customers who pay for calls in advance tend to pay a higher per minute rate than contract customers, Consumer Reports’ January issue argues that unless you talk or text quite a lot, prepaid services could actually save you money.

Savings could add up to $220 a year for a couple under deals offered by Virgin Mobile USA Inc, it estimated. And if you change your mind about the service mid-year, you could always drop it without paying a steep termination fee.

However, prepaid phones are often more basic than phones that come with monthly service plans and the carrier is less willing to shoulder a high portion of the cost of the phone.

Consumer Reports highlights four prepaid phones ranging between $60 for the Samsung SCH-u340, which has a basic camera, and $20, for the Nokia 2610, which has 6.5 hours of talk time.

But after all that if you’re still hankering after a fancy touch-screen phone and big-name glamour for the holidays, one option could be G1, made by HTC Corp and sold by T-Mobile USA, a Deutsche Telekom AG unit.

The phone, which is powered by Google Inc’s Android software, at $179 is cheaper than iPhone, and T-Mobile USA data services are cheaper than AT&T’s options for iPhone users.

T-Mobile USA charges G1 customers $35 for unlimited data. But the much talked about Google phone may not be for the faint of heart, according to Greengart.

“The G1 is the biggest leap of faith, as buying one is really betting that the Android development community will flourish and smooth off the phone’s rough edges,” he said.

Editing by Gerald E. McCormick

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