Are 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 (MVNO). You can save hundreds each year in cellular costs without signing a contract.

MVNOs offer cheaper rates by renting spectrum from major cellular providers and reselling to consumers. Unlike the contracts sold by the telecoms, MVNO plans are usually prepaid and without contractual obligation, giving consumers freedoms they never knew existed.

Here are the top 10 reasons to make the switch to an MVNO.

1. Affordable Monthly Plans

MVNOs offer very low prices. While the three major carriers in the US charge approximately $100 a month for a smartphone plan, MVNOs provide the same service for much less. According to Josh Gordon, CEO of the MVNO Red Pocket:

Our most popular plans are at $10, $20, and $30 per month. People love those plans and the typical consumer switching from one of the big carriers saves about $600 a year by switching.

2. No Contracts or ETF Fees

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The Big Three carriers, Verizon, T-Mobile, and AT&T, offer subsidized phones with inflated monthly fees attached to a two-year contract. These contracts are legally binding, meaning if you attempt to leave the plan before completing two years of payments, you're liable for an Early Termination Fee (ETF). Depending on the carrier, ETF fees can cost up to $350. However, carriers often lower the ETF fee the longer a customer remains with a plan.

Because you pay upfront for MVNO plans, there aren't contracts or hidden fees.

3. Flexibility in Plans

Modern prepaid carriers offer a diverse range of contract-free plans, ranging from annual lump payments to pay-as-you-go (pay-go) monthly payments. In addition, some carriers, such as Red Pocket, offer Family plans. The family plans cost an additional $20 per line per month but offers unlimited data, talk, and text.

The flexibility of MVNO plans helps match consumers with their data usage. For example, someone who rarely uses their phone pays around $100 monthly on AT&T's network.

4. Pay-Go Plans Include Data or Minute Roll Over

Some MVNOs offer "pay-as-you-go" (Pay-Go) plans. Pay-Go accounts receive what's called "rollover," where unused minutes and data are applied to a rolling balance of funds or airtime.

While Pay-Go is harder to find, MVNOs like AirVoice Wireless still provide them. They're ideal for consumers who rarely use their mobile devices, although they can become prohibitively expensive for heavy users of data. One of the unique quirks of a Pay-Go plan is a monthly balance requirement. For example, AirVoice Wireless requires consumers to add to their account balance in varying amounts, ranging from $10 every three months or $100 for a full year of service.

Because of a rollover, prepaid phones are commonly used as emergency lines or burner phones.

5. No Invasive Credit Or Social Security Number Snooping

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Unlike the major carriers who require credit checks on their customers, prepaid carriers collect hardly any customer information. So, instead of forking over your social security number, date of birth, address, and more, you only provide cash and your name.

In the event of a security breach of their systems, such as T-Mobile's massive data leak, 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 also make prepaid phones useful for staying off the grid.

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, they can switch cellular carriers and maintain their phone number. We've heard reports of big carriers using red tape or technical excuses to prevent the porting of a number to an MVNO. However, if this ever happens to you, it's grounds for a lawsuit.

I've experienced this myself as well. Frontier Communications refused to port my old phone number to my new address.

7. Same Service, Cheaper Prices

A common misconception consumers have is that prepaid carriers offer poorer quality service than large companies. This assumption is partly false. The misconception originates with something called "network prioritization." Network Prioritization is when the backbone service, such as T-Mobile, prioritizes some network activity over that of the MVNO. However, according to Josh Gordon, this isn't true:

In regard to network prioritization, we do not see it on our most popular network, which is GSMA. To the best of my knowledge, our traffic is mixed in with all the other traffic from that carrier's retail customers [and] certain other networks.

That said, I do know that network prioritization exists, for example for emergency first responders, on GSMA and other networks.

However, I’d also say that the typical customer almost never sees an impact from network prioritization these days, regardless of which network they are on.

Most cellular networks in America are over-engineered and have so much capacity on them, it's rare that a particular tower will be so oversubscribed that network prioritization will kick in. So, to the best of my knowledge, while network prioritization may happen occasionally, I don’t think it’s common for it to have a material impact on a customer’s experience.

8. Bring Your Own (Unlocked) Device

Many, but not all, MVNOs allow customers to use their own unlocked devices rather than forcing them to buy locked-down phones.

However, a key point to remember is that each MVNO rents a spectrum from one of four carriers. Each carrier is either GSM or CDMA. GSM phones cannot work on a CDMA network and vice-versa. Fortunately, several networks rent spectrum from all three big carriers. For example, Straight Talk sells both CDMA and GSM SIM cards. If you have a CDMA phone, you'd want to find a CDMA SIM card and make sure the corresponding network provides coverage in your area.

Additionally, many newer phones purchased unlocked have the internal components to function on CDMA or GSM networks. In particular, many newer iPhone models work across all networks. So if you purchased an unlocked iPhone 13, it should work with any MVNO that allows you to Bring Your Own Device (BYOD).

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The savings are jaw-dropping. Compared to Verizon's $107.77 per month, three-year contract that comes with an iPhone 14 Pro, Straight Talk's $35 Bronze Unlimited plan saves over $1,000. In other words, you're almost always better off buying the phone you want unlocked and using it with an MVNO.

While BYOD often saves money. There are some very affordable plans that come bundled with a phone. For example, Beast Mobile offers a Samsung A12 with five years of service and a 2GB monthly data allowance for $250 upfront. While the A12 is three years old, the bundle might be appropriate for those with limited means.

9. eSIM Technology Changes Everything

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eSIM technology is essentially a reprogrammable smartphone chip that replaces the SIM card. If you own a compatible device, such as an iPhone built after 2018 or many high-end Android devices (such as the Doogee V30, which we reviewed), that means you can jump from carrier to carrier just by finding a compatible MVNO and configuring it through your phone's setup menu.

10. Ethical and Sustainable

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

What's the Best MVNO?

There's no one-size-fits-all solution. MVNOs rent space from the major cellular carriers, which might make you wonder what's the best carrier to sign up with. Ideally, the best MVNO provides the features you need combined with network performance and coverage reliability. For example, Ting offers BYOD, flexible plans, and coverage across T-Mobile and Verizon's networks, but it lacks unlimited data and pay-go options.

Therefore, if AT&T provides the best coverage in your area or you need more flexibility in your data packages, there are better options out there.

It's Time to Switch to an MVNO

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 it.

Anyone out of contract or purchasing a cell should consider an MVNO.