As we just discovered, the lifetime cost of smartphones is enough to make you question the meaning of life.
But why are prices so high and seemingly on the rise when the cost of data transfer should be declining? For starters, there is a lack of competition to keep prices down.
In fact, there are only four legitimate mobile national network operators left in the U.S.:
- Verizon (149 million subscribers)
- AT&T Mobility (138.8 million subscribers)
- T-Mobile (owned by the German Deutsche Telekom) (70.7 million subscribers)
- Sprint (54 million subscribers)
These four own a majority of the wireless spectrum from which almost all mobile/data plans in the U.S. run. There are a few other smaller network operators such as U.S. Cellular (with about 5 million subscribers) – but it’s probably only a matter of time before they are bought up by the big 4. Consolidation is the trend, because consolidation = lack of price competition and more wireless spectrum gained by the buyer.
Except, when it comes to MVNO’s.
What is an MVNO?
MVNO = mobile virtual network operators.
MVNO’s do not own wireless spectrum, like the big 4 do. They buy up wholesale network access from the big 4 at low rates. And then charge customers whatever they like.
Most MVNO’s know they can’t compete with the big 4 directly:
a. they don’t have their own network, so what is their selling point?
b. they don’t have huge ad budgets
So who do MVNO’s compete with? Each other. And what do they compete on? Price (almost all MVNO plans are prepaid plans), and therefore, they run on extremely low margins. As a cost conscious consumer, you win. You aren’t paying for a brand name, huge ad campaigns and associated acquisition costs, subsidized expensive smartphones, deadbeat customers who don’t pay (most MVNO’s are prepaid), retail stores with staff, the cost of building new towers, servers, and a huge network, or any of that stuff.
You pay slightly above the wholesale rates at which network access is bought by the MVNO.
In fact, customers of the big carriers were found to pay about 3.4X the amount of customers of MVNO’s. And if you’re smart about choosing an MVNO plan, that difference is more like 10X.
And here’s the beautiful thing. You’re using the same damn networks!
- Republic Wireless, Virgin Mobile (owned by Sprint), and Boost (also owned by Sprint) – all run off of Sprint’s network. Republic also runs off of T-Mobile.
- Airvoice? AT&T.
- PagePlus and Xfinity Mobile? Verizon.
- Tracfone, Net10, and Straight Talk (all owned by America Movil)? They run off of Verizon, AT&T, Sprint, and T-Mobile, depending on phone and location.
So that “reliability” that the big 4 touts in their ad campaigns is really just an MVNO away.
MVNO’s Fulfill Most Needs & Most Wants (Very Cheaply)
Here’s what I want in a mobile phone plan:
- decent amount of cheap talk/text minutes, so I don’t run out
- a reliable phone with touchscreen and a camera and decent battery life
- memory enhancement capabilities (memory card upgrade), so I can turn the phone in to an mp3 player with a huge library
- wifi capabilities so I can stop at a free wifi hotspot and jump on the web, if needed
Lets put it in the perspective I mentioned in the last article. Up until the mid 90’s, in the entire history of the human race, very few people had a phone at all. And when they did, it didn’t have mp3, touchscreen, or wifi capabilities. Just numbers and a call and power button. And for this phone that was no more advanced than a home phone, they paid $50+ per month for service.
20 years later, all of those wants I listed (above and beyond mid 90’s cell phone capabilities) can now be had for notably less than $10 per month! Paying $115 per month for a smartphone plan seems absurd, when you look at it from that perspective.
A List of the Best & Cheapest Prepaid Plans from MVNO’s
I decided to put together a list of the cheapest prepaid MVNO plans to get you started. This list blends the largest companies with the best reputations and most affordable plans.
These plans (outside of Republic Wireless) are really designed for those who use limited mobile data, in order to keep costs low, paired with wifi. If, instead, you’re looking for more data-heavy plans (including the big 4), check out my articles on the cheapest data plans and the cheapest mobile WiFi hotspots.
|MVNO||Network(s) Used||Cheapest Prepaid Plan||Notes|
|Xfinity Mobile||Verizon||$0/mo. min for unlimited talk & text, + 200MB data (you pay taxes). Beyond that, 2 different pricing options.||Outstanding deal for low data use, with flexibility to add data if needed. Must be within an Xfinity service area to be eligible.|
|Tracfone||AT&T, Verizon, T-Mobile, Sprint||$6.66/mo. min., pricing plans vary.||Get a "triple minutes for life" phone to cut cost of minutes.|
|Republic Wireless||Wifi, then Sprint or T-Mobile||$15/mo. unlimited talk/text/wifi data. (you can add data from there)||Uses wifi, then switches to Sprint or T-Mobile. Can now bring your own phone.|
|FreedomPop||Wifi, then Sprint||$0/month, including unlimited talk, text, and 500 MB data||Uses wifi, then switches to Sprint.|
|Simple Mobile||T-Mobile||$25/mo., includes unlimited talk, text, 1 GB|
|PagePlus||Verizon||$2.50/mo. min. $0.04-$0.10/min., $0.05/SMS, $0.10/MB||With America Movil purchase, changes are likely ahead on pricing.|
|Airvoice||AT&T||$3.33/mo. min. $0.10/voice, $0.10/SMS, $0.066/MB. Pay as you go plan also available.||You can actually run an iPhone with Airvoice.|
- Which MVNO or prepaid wireless plan do you use, and how much are you paying?
- Do you refuse to use an MVNO? Why?