News by Andrew Kameka on Monday May 13, 2013.
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What's the best carrier to sign a contract with or pay for prepaid service? Zact, a new carrier eschews both and encourages customers to not sign a contract and adjust their plans so they pay for their activity rather than a predetermined expectation of services.
Zact works by tossing out the concept of contracts and stringent tiers or contracts. The carrier instead focuses on flexibility that enables customers to pay for specific services, buy buckets of texts or calling minutes, and have those services auto-renew each month until the consumer decides to cancel. The service is also flexible because someone can adjust a plan each month to better reflect his or her needs at the time. An account management app features sliders that add or remove options to make needs more accurate. In other words, you can set data to zero when traveling abroad or increase text and talk allowance when nearing the end of the month and realizing that you've used up too much of each already.
Options are not just limited to the standard text, talk, and data tiers. Zact has app-specific plans like $5 for access to Instagram or Facebook, $5 for Maps and navigation, $3 for email or Twitter. Rather than pay $5 to $45 per month for a data plan, Zact accepts payment for specific data-intensive services. The company maintains a list of apps in Google Play that fit a certain activity, so someone purchasing the email plan would be able to use Gmail or their favorite alternative email app, and the same goes for Twitter.
The trouble with Zact is that it's launching with some tough limitations in terms of coverage and device options. Zact is an MVNO that will be available on other carriers later this year, but it's launching today only with Sprint. It has a roaming agreement on CDMA that will enable Verizon to plug holes in Sprint's coverage map. Zact works with OEMs to build software into phones that make it possible to choose specific services based on awareness and efficiency, so only approved devices can be used at launch. The compatible phones so far are the LG Viper 4G LTE for $399 and the LG Optimus Elite for $199 (both prices are off-contract). Backwards compatibility is not yet available but firmware updates in the future will make it possible on some existing devices. When I asked Dr. Greg Raleigh, CEO of Zact's parent company ItsOn, why not support existing phones, he said, "We don't want the complexity of explaining to customers how to install new software on their phone yet."
Zact is the most flexible service available in the U.S., and it's also one of the most transparent. Along with other journalists at a recent briefing, I attempted to pepper Raleigh with questions to discover the fine print and was unable to find any deception. "This makes too much sense," I said. Zact may not provide the depth of coverage and hardware options for most people to switch, but its set-up will be appealing to people who want to pay only for services used, and it may be more enticing for others once Zact expands its smartphone offerings. Here are a few of my notes from the briefing that shed more light on Zact:
- Zact is open to family plans and can manage all devices from an administrative device. A parent or lead person can selectively add or adjust services, so you can add more texts to a child's account or subtract minutes from a spouse's to keep a bill in check. Phones can easily be added or removed from the account, and multiple people can have administrative privileges.
- Parents can manage specific services based on time. A child's phone could have all apps suspended during school hours except for calculator, email, and the dialer. It can also allow only Mom or Dad calls to text a young child. When the parent sets the parameters to activate, the phone automatically changes to display only the apps and contacts that are permissible.
- Data is data; there are no restrictions on tethering or any special plans necessary to turn the phone into a mobile hotspot.
- There are no credit checks, contracts, or set charges. Phones are sold off-contract and purchased in full, so there's no need. Customers need only a valid credit or debit card on file to have their services auto-renew each month. Credits are given if someone purchases too many minutes or texts that go unused.
- Customers can use the Zact.com website to enter in a monthly phone budget and choose services according to needs, but the website is just a basic simplification of what Zact offers. The on-device account management app is even more flexible.
Andrew is based in Miami, Florida.