The Future Is Prepaid: How To Save Hundreds On Your Mobile Phone Bill In 3 Easy Steps
by Kannon Yamada
Cutting your mobile phone bill in half takes only three simple steps – first, find a carrier that offers discounted plans, such as an MVNO. Second, get an unlocked phone. Third, and optionally, you can optimize the phone’s functionality to cost less. Some start-up costs apply, but the overall savings will greatly outweigh the expenses.
To illustrate the simplicity of switching to an Mobile Virtual Network Operator (MVNO), this article documents my experiences buying an unlocked phone, migrating to a cheaper plan and then optimizing my phone for inexpensive operation. While your savings with this technique might vary, the average user can cut their bill in half.
- First, you must not be under contract with a mobile phone carrier.
- Second, you must either have an unlocked phone or purchase an unlocked phone.
- Third, you must live within an area covered by your selected MVNO.
Step 1: Choose An MVNO
An MVNO simply rents broadcast spectrum from one of the four major carriers. Because of technological differences between networks, AT&T and T-Mobile phones use the internationally popular GSM technology. Consequently, their phones are inter-operable, so AT&T phones work on T-Mobile and vice-versa. Also, changing the SIM card will change carriers.
Conversely, if your phone originates with Verizon, it will only work with networks that lease space from Verizon. Similarly, if your phone hails from Sprint, it will only work with an MVNO that leases space from Sprint. While both these networks use the same cellular technology, CDMA, their phones do not always function on each other’s networks, although exceptions exist.
MVNOs offer three kinds of plans:
- Pay-Go, where customers pay for every minute of talk, each text and megabit of data consumed.
- Unlimited plans charge monthly fees permit unlimited use of talk and text, but then reduce the speed of data transfer after the customer reaches a cap. Most plans permit 2-3 GB of data before throttling data.
- Limited plans provide limited minutes, text and data for a set monthly price.
I will only cover four MVNOs, for brevity:
- PagePlus, which is a Verizon-CDMA operator, allows all Verizon and Alltel postpaid phones onto their network. Unfortunately, they ban certain models of phone, such as the iPhone. Although PrepaidPhoneNews.com reported that PagePlus does not block iPhone activations. If call quality ranks among your most important requirements, PagePlus offers the best per-dollar deal for Verizon-CDMA phones. Some Sprint phones will work on with PagePlus, but I would caution against even trying without strong assurances from a PagePlus rep.
- Straight Talk currently offers the best unlimited plan for GSM phones – they charge $45 a month for unlimited talk, text and data. However, they cap their data at 2 GB, at which point you get throttled. Fortunately, their throttle speeds seem to restrict the least of all MVNOs.
- Ting, a Sprint-CDMA MVNO, offers customizable plans, best suited for moderate users. They recently offered prospective customers on big networks an incentive to break their contracts. Ting will compensate you for your Early Termination Fees (ETF), with airtime up to $350 in value.
- Ptel (PlatinumTel) for GSM offers both a competitive unlimited plan and the best Pay-Go rate among all major MVNOs. Personally, I prefer Ptel’s simple Pay-Go plans and straightforward billing.
As mentioned previously, MVNOs fall into three categories:
- Global System for Mobile Communications, or GSM;
- Sprint-CDMA. It’s important to note that GSM phones come equipped with a SIM card. CDMA phones do not have SIMs and can only operate on the network that it has been programmed to operate on. So a Verizon-CDMA phone will only work on a Verizon MVNO, such as PagePlus.
SIM cards: GSM technology, which powers phones from T-Mobile and AT&T, also dominates the global market. The carrier-issued SIM, on an unlocked phone, can swap for a SIM from another network. For example, if you own a phone from AT&T and want to switch to T-Mobile, simply replace your AT&T SIM with one from T-Mo. Of course, you must first purchase the SIM from the carrier you want to switch to, first.
It’s also important to note that different sizes of SIM cards exist: nano-SIM (4FF), micro-SIM (3FF) and the regular sized mini-SIM (2FF). Despite their differing form factors, all SIMs can interchange for one another using adapters or by cutting away excess plastic. Christian elaborates on the conversion process here.
Example: my MVNO only offers mini-SIM cards and my Nexus 4 only accepts a micro-SIM. This necessitated my cutting away the excess plastic using a cut-away template and some sandpaper for the SIM’s rough edges. After chopping it down to size, the modified card fit perfectly. However, using a SIM card cutter offers an easier solution. Converting back, while somewhat unreliable, only requires a converter.
Step 2: Choose The Right Phone For Your Service Plan
Reusing your old phone will save the most amount of money. After your contract expires, call your carrier and request that they unlock your phone for use on another network. While the law regarding cell phone unlocking did change, and not in our favor, the major service providers should still provide unlock codes for their out-of-contract customers.
Speaking of unlocking, the single best unlocked phone, for the money, is the LG Nexus 4. At the $299 (8 GB) and $349 (16 GB) price-points, no phone offers similar value. However, Google only offers the GSM version. Therefore, if you are dead-set on migrating to a Sprint-CDMA or Verizon-CDMA MVNO, you may want to consider buying an unlocked phone directly from the MVNO or perhaps trying Ebay or Craigslist. Remember to only buy an “unlocked” phone.
Example: I purchased a Nexus 4, and then modified the Ptel mini-SIM to fit into a micro-SIM slot. After some sanding, and bandaging of my bloody fingers, it finally fit.
After recovering consciousness, I activated my airtime card over the Internet, which required an active signal. I had to run outside in order to receive the activation confirmation because my phone doesn’t receive a reception inside my apartment. This issue appears more frequently with GSM phones.
With Pay-Go, you must purchase the airtime in separate chunks. Some plans refer to this as a “Top-up” card. These “cards” contain credits or dollar amounts and generally the greater amounts of airtime purchased, the greater your benefit.
Example: For Ptel Pay-Go, I purchased $100 of airtime. Unlike with their $5 a month plans, this airtime never expires. If you elect to purchase in smaller amounts, the minutes purchased expire after a year. Also, all Pay-Go accounts require that you continually feed money or your service will expire.
Step 3: Optimize Your Phone For Pay-Go Or Limited Plans
If you select the Pay-Go option, where you pay for each SMS, megabit and call, you should consider optimizing your phone’s data consumption. The single best method requires turning off your data connection and using WiFi as much as possible.
Another method for reducing phone costs would be to setup a VOIP app and install Google Voice.
VOIP + Google Voice: A VOIP app will allow you to use a WiFi connection as a phone, bypassing the costs imposed by MVNOs on voice communication. On the other hand, Google Voice allows you to receive text and voice messages either through a 3G/4G connection or though WiFi. Here’s a great guide on how to optimize your phone for Google Voice.
Data management: To easily switch off your phone’s data, you can either use a widget or pull-down menu. Alternatively, you can shut it off manually:
- For Android, go to settings and then choose “Wireless & networks“.
- Next, choose “Mobile Networks“.
- Finally, uncheck “Mobile Data“.
iOS also permits shutting your data connection off. For the iPhone, this method offers the best solution.
After turning off data services, you will enable data when required, rather than leaving it on all the time. If you fail to do so, and have a Pay-Go or limited data plan, you will pay substantially when apps transfer data in the background.
In a previous article I explained that MVNOs can save all cell users huge amounts of money. This article sharpens that point by explaining, step-by-step, how to save hundreds. It’s essentially two or three steps: First, get a prepaid SIM. Second, get an unlocked phone. Third, and optionally, streamline the phone so it offloads SMS and voice services over WiFi.
Aside from having to custom cut my own SIM card, my experience was quick and issue-free. My current bill runs about $6.25 a month.
Image Credits: Cell Phone via MorgueFile.com; Cell Tower via MorgueFile.com; Silhouette via MorgueFile.com