From communicating with one another to testing out mobile sites before launch, we are without a doubt attached to our smartphones by the hips here at NJI.
While traditional 2-year contract plans are still the payment of choice for many smartphone users, prepaid plan providers known as Mobile Virtual Network Operators (MVNOs), are gaining popularity due to their inexpensive cost and noncommittal payment plans. MVNOs do not have their own physical network but instead purchase the right to use phone towers from larger carriers such as AT&T, T-Mobile, Verizon, or Sprint. This means that you pay a fraction of the price with MVNOs compared to obtaining service directly from nationwide carriers. There are a variety of MVNOs with different requirements and services on the market, the most popular one being Straight Talk.
For $45 dollars a month, Straight Talk offers Unlimited talk, text, and 2.5GB data plan. You can either bring your own unlocked GSM phone and use Straight Talk’s sim card (available in both AT&T or T-Mobile variety, take your pick) , or choose from the selection of Straight Talk approved phones that runs on CDMA frequencies. Phones that are locked to AT&T or T-Mobile will also work with their respective sim cards. Another selling point is that Straight Talk now offers 4G LTE on their AT&T sim while it was only offering up to HSPA+ speeds previously.
Carriers often lure consumers in with the latest smartphone model at a cheap up-front cost while masking the monthly cost per line over the course of a 2 year agreement. They will entice you with a seemingly low device cost, but in reality you are making up for the price of the device through high monthly plan costs over the span of the contractual period. Don’t believe me? Let’s take a look at the 8GB iPhone 4s as an example. Verizon and AT&T are selling it for as low as a dollar for a 2 year contract. Sounds like a great deal, right? Wrong. I ran through the online checkout process of the 3 carriers*, choosing the unlimited talk/text and data plan as similar as possible all across the board, and created a spreadsheet below for a more detailed break down.
As seen above, Straight Talk is the clear winner.
While you pay $450 upfront for an unlocked phone, you will still save a lot compared to buying a phone at $0.99 and paying all the extra charges carriers tack on. However, there are also a few limitations to keep in mind when it comes to MVNOs.
- Network Coverage & Data Speed – Things such as coverage or data speed may vary depending on where you are. GSM phones on Straight Talk will either be using AT&T or T-mobile towers. You should take that into consideration when deciding which sim card to pick depending on which carrier is more prevalent in your area.
- Data Limit – If you are a person that stream Pandora constantly or use your phone to tether, then MVNO might not be for you. Many MVNOs have a data cap if you are using too much data constantly and can throttle you to EDGE speeds or even suspend your service for the month.
- No Roaming Outside America – Don’t plan on using your MVNO phone service outside of America unless you purchase an international plan.
- Manual APN Configuration – You will have to manually set up your phone to the correct APNs. This is more problematic for iPhone users but there are many ways around it.
If you use your phone moderately and have no qualms with a few restrictions, you can save a lot of money on your cellphone bills by using MVNOs and your wallet will thank you in the long run.
*Prices on the spreadsheet were obtained on October 2013.