Now that we know how expensive it is to have a smartphone using the big carriers, how can we save money? Enter the MVNOs, short for Mobile Virtual Network Operator. What are they? They are virtual operators, meaning they don’t have any spectrum on their own, so they lease some from the big carriers (AT&T, T-Mobile, Sprint, and Verizon) and resell it to consumers. Since they are competing against the companies that own those spectrum to begin with, MVNOs generally offer better prices to attract consumers, and most, if not all of them, offer their plans as contract free, as prepaid and/or pay-as-you-go.
Notice that I said no-contract. Although most MVNOs still sell phones under their brand (mostly outdated cheap phones), the idea is to bring your own phone. This means no subsidy. Considering the savings you would get on the monthly plans, you still end up cheaper, especially if you purchase your phone for cheap (ie. a Nexus 4, or second hand).
Before we go further, I need to point out that the concept of prepaid and pay-as-you-go is separate in the US. In most other countries, those terms are the same. You put in money in your account, and it will be deducted when you use the service.
In the US, the terms prepaid is not considered to be the same as pay-as-you-go. The classic definition of prepaid, where you put money on your account, and then your account is deducted when you make calls based on the per minute rate is called pay-as-you-go. The concept of prepaid in the US is similar to post-paid, meaning you pay a fixed amount on a monthly basis for a pre-determined service. The difference is you pay for the service in advance before you can use the service, pre-paid, compared to post-paid where you pay after you use the service at the end of the billing cycle. In the end, it’s the same thing, you pay in advance to use the service, but you will see the two different terms being used separately in most US wireless carriers’ sites. I probably will not cover pay-as-you-go plans as most MVNOs’ pay-as-you-go offerings are lousy (very expensive per minute/per SMS/per kb rates).
For this post, I am going to focus on AT&T and its MVNOs. Before looking at the MVNOs, let’s look at AT&T itself. AT&T offers a prepaid plan on its own, part of its go-phone plans. It’s a bit confusing as AT&T disallow smartphones on certain plans. I’m going to focus mainly on plans that you can use on smartphones with data plan. AT&T’s most economical prepaid plan for smartphone would be the $25 plan + data packs. The $25 per month plan gives you 250 minutes, unlimited text, and you can add on 1GB data for an additional $25. So basically it’s $50 a month for 250 minutes, unlimited text, and 1GB data. You can bump the data pack down to $15 for 200MB if you wish to. Moving up to $65 a month will give you unlimited minutes. Compare this to AT&T’s own post-paid plan for smartphones, where the cheapest option would be $60 a month for 450 minutes, no text, and a mere 300MB data, this is not a bad deal. The catch is that the go-phone coverage area is less extensive than the post-paid plans, but shouldn’t be an issue for most people that live in cities. You can get the SIM chip for free by going to AT&T stores. I would recommend going to an actual AT&T corporate store, not a reseller, as most resellers would try to charge you money and/or scam you.
Now, let’s take a look at the MVNOs. First I would like to mention Red Pocket. They are one of the bigger AT&T MVNOs. Their prepaid plans are very simple. The most economical one for smartphone usage would be the $50 a month plan that gives you unlimited voice, unlimited text, and 500MB of data. A fair trade-off compared to AT&T’s own go-phone plan. You get unlimited minutes, but less data. There is also a $55 a month plan that bum up the data quota to 1GB. Red Pocket is one of the few MVNOs that actually sells a nano-SIM for iPhone 5 users.
I would also like to point out that you can save up a bit more (a dollar or two) on your monthly cost by purchasing the refill PIN from 3rd party resellers. For example, the $49.99 PIN at pincheap.com is $47.99, no tax. Hey, those extra dollar adds up you know. 🙂
Next, another popular AT&T MVNO is Airvoice. For $40 a month, you get unlimited minutes, unlimited text, and 500MB data. It gets better already huh, especially when you compare to the post-paid plans from the big carriers that will cost you at least eighty ninety dollars per month. $55 a month bumps the data to 1GB. There is a catch with Airvoice though. Even though you have 500MB of data, you only have access to the first 200MB (I think. 400MB for the 1GB plan). For the rest, you have to call their customer service to enable it. This can be really inconvenient. So caveat emptor.
I would like to point out Airvoice’s pay-as-you-go plan. Although the rates are nothing special (10 cents a minute, 10 cents per SMS, $1 monthly charge), their lowest denomination, $10, is good for 90 days. This is a good pick for a backup phone, even if you are paying $1 per month to keep the line. Most other operators and carriers will only give you 30 days. Airvoice only sells a mini SIM chip, although you can search ebay or Amazon to find people selling a pre-cut SIM to micro/nano size easily (for cheaper too!)
Lastly, I want to mention good2go mobile. I don’t think it’s a well-known company, but it offers a neat feature. Its most economical plan would be $40 a month that gives you unlimited calls, unlimited text, and 250MB of data. For $50 a month, you get 1GB data. The neat thing about good2go is that you can add on some more data when you need it. So instead of paying $50 a month for 1GB of data that I might not use, I can just pick the $40 a month plan, and I can add 500MB data for $10 when I actually need it. They offer mini and micro SIM from their website.
Well, how about that. Looking back when the cheapest smartphone plan from the big carriers would cost you $80-$90 a month, now you are looking at less than $60 a month prices. Consider a typical 2 year contract. Let say you save $20 a month by going with an MVNO. In 2 years, you have saved $480, and that doesn’t include taxes that you have to pay on those post-paid plans. Add on to the fact that you can buy refill PINs for a dollar two less, that is quite a big savings. If you save $30 a month, that’s at least $720 in your pocket for two years! You can buy a new iPhone with that. Oh, and get this, if you finish your contract on those big carriers’ post-paid plans, your monthly plans are not getting any cheaper, even though technically you have fulfilled your subsidy.
As a side note, there used to be another large MVNO utilizing AT&T towers called Straight Talk. Straight Talk offered both AT&T SIM or T-Mobile SIM. You can find them at Walmart, but they also sell the SIMs on their website. Their plan is $45 a month ($50 with taxes if you buy the PIN from the website) for unlimited minutes, unlimited text, and “unlimited” data (which translates to about 2GB. Still, it’s not bad). Comparing the prices, Straight Talk had the best deal if you need a bit more data than the 1GB offered by the other MVNOs. Problem is, for some unknown reason, they no longer offer the AT&T version of their SIM on their website. Only T-Mobile SIM is listed now.
On my next post, I will explore T-Mobile MVNOs, where the selections are a ton more, and also the bang for the buck.
Addendum: I forgot to mention H2O wireless, another AT&T MVNO. They have decent plans, although fairly similar to the other MVNOs. $50 a month gives you unlimited minutes, text, international text, and 500MB data. $60 bumps the data to 2GB. $40 bumps the data down to 100MB. Mini and micro SIM are available for $10.