No Longer Tied to a Cellular Contract? 10 Reasons You Should Switch To An MVNO

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what is an mvnoAre you out of contract with your cellular provider? Rather than upgrading your phone, and signing a new contract, consider switching to a mobile virtual network operator, or MVNO. You can save hundreds, even thousands, each year in cellular costs, without signing a contract.

MVNOs offer cheaper rates to consumers by renting spectrum from one of the four major carriers. They function as wholesalers, who purchase bandwidth in chunks from the big carrier networks, and sell at a discount to consumers. Their plans are always prepaid and without obligation, giving consumers freedoms they never knew existed under the big four carriers.

Excuses to dump possessive big brand carriers and their outrageous contracts abound, but here are the leading 10 reasons for switching over:

1. Inexpensive Monthly Plans

The greatest advantage MVNOs offer is in its pricing. While the four major carriers in the US charge approximately $100 a month for a smartphone plan, MVNOs offer the exact same deal for $40 a month.

what is an mvno

2. No Contracts

One of the most unethical behaviors that the big four carriers engage in is offering subsidized phones with inflated monthly fees attached to a two-year contract. These contracts are legally binding, meaning if you violate the terms of the contract, you might be held liable.

mvno cellular service

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3. More Flexible

Prepaid plans allow for two basic kinds of plans: pay-as-you-go (pay-go) or “unlimited”, which typically throttle data speeds after about 2-3GB of use. Some carriers, such as Ting, offer flexible plans, whereas most don’t have any differentiation between plans other than the pay-go and unlimited.

The key points to keep in mind – first, look at the minimum payment required to keep the account active. Second, look at the rates for each category of service, such as price per text and price per megabyte of data. Third, make sure your plan doesn’t come with an expiration date for minutes, otherwise you won’t get rollover after a certain period of time. All three of these points should meet your current needs.

4. Minutes Roll Over

In a contract plan, consumers get caps on minutes and texts. Any activity over the cap and an outrageous overage rates gets applied.

Perversely, any unused minutes, data and SMS at the end of the month disappear. In comparison, prepaid carriers that provide the pay-go option allow their customers’ minutes to accumulate, if unused. These minutes roll over to the next month Because of rollover, prepaid phones are commonly used as emergency lines or as burners.

5. No Invasive Credit Or Social Security Number Snooping

Unlike the major carriers who force customers to sign binding contracts, prepaid carriers collect hardly any customer information at all. So, instead of forking over your social security number, date of birth, address and more, you only provide cash and your name.

mvno cellular service

In the event of a security breach of their systems, your personal information is protected. Additionally, the payment process for prepaid phones is extraordinarily simple and flexible. Customers aren’t even required to keep a credit card on file! These features make prepaid phones useful for staying off the grid, as well.

6. You Can Port Your Old Number Over

Thanks to the FCC, US law requires that cell phone operators allow for “local number portability”. As long as a customer remains in one locality, he can switch cellular carriers and maintain his phone number.

7. Same Plans, Cheaper Prices

A common misconception that consumers have about prepaid carriers is that they offer poorer quality service than large companies. This assumption is patently false. MVNOs operate on whichever large network leases them spectrum. Ptel, for example, rents bandwidth from T-Mobile. However, T-Mobile cheapest individual plan, with data, costs nearly $90 per month. Ptel’s nearly identical plan costs $40 per month, off-contract.

8. Bring Your Own Device

Some MVNOs allow customers to port over their own unlocked device, rather than forcing them to buy locked down phones. However, GSM phones cannot work on a CDMA network and vice-versa. Also Sprint-CDMA and Verizon-CDMA phones aren’t inter-operable. A good rule of thumb is to check with your prospective network before buying a SIM card or consider an unlocked phone.

9. OS Agnostic

Prepaid carriers for the most part don’t differentiate between the iPhone and Android handsets. Meaning, you can get the iPhone 5, unlocked, from the Apple store for $700.

After calculating the price of an unlimited plan with a two-year contract, you actually save almost $1,000 by going with an unlocked iPhone 5 and an unlimited prepaid plan.

10. Ethical

what is an mvno

Reusing older phones prevents mercury and other toxic chemicals from leaking into landfills. Aside from saving money, it’s also environmentally friendly.

Recommendation

  • For GSM, I suggest either Straight Talk or Ptel. As mentioned previously, Ptel’s rates can’t be beat, although Straight Talk’s plan does compete.
  • For the Sprint-CDMA network, you can’t go wrong with Ting. Flexible plans, reasonable rates and BYOD make Ting a solid choice for Sprint-CDMA.
  • For the Verizon-CDMA network, it seems that PagePlus offers the best deal. Because PagePlus rents space from Verizon, it also has the same quality.

Conclusion

Considering the huge advantages that MVNO networks have over the big four networks, there’s very little reason not to switch over. The extraordinary savings alone, which can reach thousands of dollars, justify a switch.

Anyone out of contract, or purchasing a cell, should consider an MVNO.  Let us know in the comments if you’ve done so, and whether or not you’re happy with it.

Image Credits: Cellphone via MorgueFile.com, Money via MorgueFile.com, Chains via MorgueFile.com, Evil Grin via MorgueFile.com, Dumpster via MorgueFile.com

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Comments (37)
  • Sylvia McGowan

    Are there any MVNIO’s in Canada? Looking at buying an unlocked cell phone … have never had a cell phone so am very new at this. As well, what are the best cell phones? Want easy to use, touch screen … am legally blind so don’t want any little keys.

    • Kannon Yamada

      There are! Canada has the same shady cell phone scams as we have in the US. Contracts should be illegal.

      One of the better cell phones for the visually impaired is the iPhone. Fujitsu is also working on a new kind of smartphone with enlarged icons, but it’s not available in Canada or the US.

      Anyway, I looked at a number of Canadian MVNOs. You have among the worst prices in the west. It’s really bad!

      Anyway, I like Virgin Mobile and Koodo because of two reason – price and phone selection.

      If you are entirely new to smartphones, I suggest trying out an older version of the iPhone, such as a 4 or 4S. If you don’t like it, you can always resell it. The companies I mentioned may have some kind of return period, although I do not know for certain.

      You may want to look at each individual carrier for a plan that best suits you, though:

      http://www.prepaidmvno.com/mvno-companies/north-american-mvno-companies/canadian-mvno-companies/

      And if you have any more questions, check out my article on how to get setup with an MVNO:

      http://www.makeuseof.com/tag/the-future-is-prepaid-how-to-save-hundreds-on-your-mobile-phone-bill-in-3-easy-steps/

  • Ron Harper

    I switched my son from the Verizon family plan to “Straight talk” and has been using it for the past 3 months. A couple reasons he has it is, like everyone else was to save money, and also for web access. When looking at Verizon data plans as well as the other major carriers it only seemed to make sense to switch him to that. I don’t understand the reasoning behind the “data” plan cost. Could someone enlighten me on this? Why do the major contract carriers “have to” charge such astronomical prices when the other non contract plans add it at virtually no cost?

    • Kannon Yamada

      Everyone should ask that question, Ron.

      The way major carriers overcharge is through luring customers in with high-end phones that only they carry. They create the false notion in the minds of consumers that $80 a month is the right price for a smartphone contract.

      But anyway, the best example of this is the iPhone. When it came out consumers had no idea how much data plans were actually worth. They also had no idea how much the iPhone cost unlocked. Because people had no accurate measures of comparison for how much to pay for data, $80 became the established market price.

  • Alastair Crombie

    Is this relevant to the United Kingdom or just the USA?

    • Kannon Yamada

      Hello Alastair, the article still applies to UK MVNOs – although the UK has cheaper rates overall than in the US. The UK also has different MVNOs.

      ‘http://www.prepaidmvno.com/mvno-companies/eu-mvno-companies/uk-mvno-companies/

  • Elena Sicconi

    What timing! I have been looking to switch from my (liked but) expensive sprint plan because I love the unlimited data but not the bill, and this helped a TON! That, and in the comments found that my initial plan to go to Virgin should be reconsidered..

    • Kannon Yamada

      I’m glad this helped! There are currently four MVNOs that use the Sprint backbone:

      http://www.howardforums.com/showthread.php/1778773-Sprint-mvnos-with-byod-or-getting-it-Listing

      Ting is the most flexible, but you may wish to look at each individual plan to find which one best suits your needs.

    • Kannon Yamada

      Elena, I just read the comment up top about MVNOs not offering as good a service as the major carriers – that’s mostly a rumor to my knowledge. Some MVNOs don’t offer data roaming or other services, meaning your data connection won’t be as good if you go traveling.

      Here’s the thing: the spectrum-sharing agreement between many major MVNOs and major carriers guarantees equal service. That means data, voice and SMS delivery are identical to that of the major carriers.

      There are some exceptions – I believe Ptel doesn’t allow data roaming. There’s a few others in the same boat as Ptel. But otherwise their service on the whole equals that of the major carriers they’re based on.

      Ting and Virgin Mobile, I’m pretty sure, have 100% access to the same call quality as on the Sprint network. However, if you plan on using their ETF airtime rebate program, be sure to speak to a rep first, before signing up. It can be very tricky switching over due to some of the various conflicts going on within our legal system.

    • Elena Sicconi

      Ah, I see. I mostly am just frustrated that I pay so much for what essentially is only a data plan… I seldom use voice minutes and texting I can do through Google Voice. If only my iPad was more convenient as a phone….

    • Kannon Yamada

      There’s a website that might help you:

      http://www.prepaidphonenews.com/2011/02/best-prepaid-data-carriers-and-plans.html

      They did a breakdown of the best prepaid data carriers and plans.

      It’s excellent, by the way, that you’re using GV for voice and text. That can save a huge amount of money!

  • PalTech66

    Don’t know why you’d recommend Ting on the Sprint-CDMA network when Virgin Mobile (VM) is a LOT cheaper!!

    I just switched from Sprint to VM and for $45/mo (no surcharges) I get 1200 anytime minutes, unlimited text and ‘unlimited’ data which is actually capped at 2.5GB when using 4G (unlimited on 3G).

    At Ting you’d pay $74/mo. for less: 1000 min. / 2000 text msgs, / 2GB data, PLUS unspecified ‘surcharges’!

    You should do more research before making recommendations!!!

    • Anonymous

      Glad you asked. Ting is BYOSD – bring your own sprint device and its lower end plans are cheaper than Virgin’s. It’s a mid-range service, suitable for a wide variety of customers.

      I don’t think anything beats Virgin’s 300 minutes unlimited data plan for $35 or $45 a month, combined with their customer service and lavish replacement plan. However, you can’t unlock the vast majority of VM phones, so any phone you buy from them stays with them. If you usage pattern ever changes, you may be stuck inside a contract that costs a lot more than you consume.

      I was a longtime VM customer – from 2006 until last month. I had the $25 a month unlimited plan (3G only). However I only used about one or two minutes of voice a month and maybe 20 megabytes of data. After doing the math, a PayGo seemed the best deal.

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For more details, please read our disclosure.
Affiliate Disclamer

This review may contain affiliate links, which pays us a small compensation if you do decide to make a purchase based on our recommendation. Our judgement is in no way biased, and our recommendations are always based on the merits of the items.

For more details, please read our disclosure.