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Guide to Cell Phone Calling Plans

This Mobilook guide helps consumers understand cell phone calling plan terms and features. It discusses the types of calling plans offered by wireless service providers and specific features and charges. Finally, customer service, wireless number portability and some pitfalls are described.

  1. Overview
  2. Types of Calling Plans
  3. Calling Plan Features and Fees
  4. Popular Promotions
  5. Customer Service
  6. Wireless Number Portability
  7. Cell Phone Locks
  8. Beware: Calling Plan Pitfalls
  9. Five Factors That Affect Your Cell Phone Bill

1. Overview

A wireless service provider is a company that owns (wireless network carrier) or resells access to a wireless network. This access allows a subscriber to connect their mobile handset to the public telephone network, another wireless network or the Internet.

Wireless service providers bundle and sell their network access features as a service called a "calling plan." Most calling plans are sold bundled with a mobile handset. Other plans allow the subscriber to use a handset from a third party.

The calling plan business is very competitive in most countries. Wireless service providers make their profit on a sale in one of three ways:

  • Upfront with an expensive handset and no contract, or
  • Over a mid-length term contract with a mid-priced handset, or
  • Over time a long-term contract with a low-priced handset or limited calling plan.

The best calling plan for you is probably where you can find a package comprised of a handset and calling plan that best match your needs and budget; no more and no less.

Contrary to industry advertising, no phones are really "free." You pay for the handset over the life of your service contract. The calling plan and handset that are most suitable for you depend on your mobile calling needs and your budget.

2. Types of Calling Plans

Contract (Monthly) Plans

Monthly (post-paid) contract plans have a fixed monthly charge from $20 to $70 and up per month plus other charges. They usually have a fixed term (contract period) of one to three years.

The advantage is that you get more features, more minutes or lower rates. The longer the term, the lower the rates. Some providers offer month-to-month plans.

The disadvantage is that you are locked into that carrier and plan for the term of the contract. If you want to cancel the contract before its expiration, maybe you want to switch carriers, you will pay a large cancellation fee (up to $200).

There are family or shared plans for use with more than one phone. The minutes of the plan members are pooled.

Qualifying for a contract usually requires a good credit record and/or a credit card. This can be a problem for some people.

Each plan offers different features and charges. The best plan for you depends on the features you need, your phone usage and your budget.

Prepaid Plans

Prepaid plans require payment for air-time before you use the phone. Also know as pay-as-you-go or no-contract. There are no contracts, deposits, credit checks or cancellation fees.

Prepaid plans have higher airtime rates, call charges and lower service levels than monthly plans. But you are free to cancel at any time without fee or penalty.

Airtime is bought in fixed dollar amounts, such as $10, or $50 for a fixed number of minutes. The higher the amount, the lower the calling rate per minute. The airtime card usually expires in 30 or 60 days, and the unused amount is lost. Cards can be repeatedly topped up to the full amount with a credit card, on a website or at select retailers.

A prepaid plan may or may not come with a mobile handset. The discounts offered on handsets are smaller because the service provider has a smaller and less certain revenue stream from the subscriber.

Prepaid plans are good if your monthly usage is low (emergencies only), you need a mobile phone for a short-term, or you do not qualify for a monthly plan.

Data Plans

Mobile data plans are for sending and receiving e-mail, text messaging (SMS short message service) or picture messaging (MMS multimedia service), downloading ring tones and games, or accessing the Internet (using a mini-browser designed to work with text-only versions of sites such as Yahoo, MSN, Google and CNN).

The plan's features depend on your handset and carrier network. Some setups can only exchange text or picture messages with phones that use the same network.

Many data plans appeal to people or businesses that have large or specific mobile data needs. They typically use a mobile device that has a full keyboard for text entry, such as a BlackBerry or smart-phone

Data plans can be purchased separately or combined with a voice plan. Rates are charged per month, per message or per megabyte of data downloaded. The higher the dollar commitment, the lower the rate.

Most mobile phones connect to the Internet at a slow speed, about 115 kbps on a GPRS network. Don't expect to use mobile data for heavy data needs. It is still no match for a computer with broadband Internet access. Newer or upgraded wireless networks have faster data speeds.

3. Calling Plan Features and Fees

Coverage Area

The area of service coverage is defined by the system of radio communications antennas owned or used by the service provider. Coverage and reception quality vary depending on the network design and on your location.

Service advertised as "national" coverage might mean that 80% of the population area has service. Check with each service provider about your specific coverage areas of interest before you sign up.

To avoid having a weak or dead spot in a location that is important to you, such as home, office or cottage, try to get a free phone trial or ask friends about their experience with the service.

Plan Area

The plan area is the primary or only area where your calling plan works. City, regional and national calling plans are available.

The plan area is the calling area for your plan's limited and unlimited minutes.

Minutes used for originating calls within the area apply to your monthly limit. Making a call outside the area, if possible, costs extra.


Originating or receiving a call on another carrier's network is called roaming. Extra charges may apply, such as roaming fees and long distance tolls.

International roaming plans are available, but you have to have a phone, such as a world phone, that operates on those other network modes and frequency bands. Check the networks in the foreign countries for compatibility before you buy or travel.

Roaming fees can be exorbitant: up to $10 a minute or more, plus roaming data fees if applicable. This is for voice calls and for data access, such as browsing the Internet. Check the details of your calling before you roam and dial.

Minutes per Month

Most calling plans allow you to use up to a fixed number of minutes a month, usually applied to outgoing and incoming local and long-distance minutes. Minutes over the limit cost extra. The minutes may or may not apply during peak, off-peak, evening or weekend hours.

A family plan lets up to four people (mobile phones) share a monthly pool of minutes for an additional monthly charge.

Rate per Minute

Per-minute charges can be applied to incoming, outgoing, local and long distance calls.

Peak and off-peak rates – The rates can vary depending on the day of week and time of day. Rates during business hours are usually the most expensive. Each provider has its own definition of peak time.

Rates for calls outside the plan area are usually billed at a higher rate.

Calls to another mobile phone, usually on the same network, are often not charged airtime Also know as mobile-to-mobile minutes.

Airtime and long-distance tolls, for voice, messaging and Web access, can be charged by the minute or by the second. Per-second billing is less expensive because you pay only for the exact length of your conversation. With per-minute billing, a five-second call or a wrong number call will cost you the one-minute rate.

Data: E-mail, Messaging and Web Access

E-mails are usually charged a fee per month for a fixed number of messages, plus a per-Mbyte fee for additional messages sent or received.

Text messaging is usually charged a fee per month for a fixed number of messages, plus a per-message fee for additional messages sent.

Accessing Web pages on the Internet is usually charged per megabyte for the size of each page downloaded, including images. Mobile Web pages (WAP) are smaller and simpler than regular Web pages (HTML). They require less data transfer.

Data services are charged a fee per megabyte of files uploaded or downloaded. This fee may be applied to some or all of e-mails, Web pages, text/multimedia messages, ringtones and images. The per-megabyte fees may be applied in addition to per-message fees.

Some files, such as video files and Web pages with large images, are large and can be time-consuming or expensive to download.

If unlimited messages are offered, additional fees may be applied for premium messages such as roaming, international, MSN Alerts, contests, promotions, etc.

You should be able to view your data usage on your Web-based account page at your service provider.

Additional Features and Services

Extra features and services may be available such as:

  • Unlimited local calls, usually within a city zone.
  • Free home calling. Unlimited calls between your home phone line and mobile handset. Long distance and roaming charges apply.
  • Reduced rates on long-distance minutes.
  • Reduced rates on text, e-mail and instant messages.
  • Reduced rates on mobile Internet downloads.
  • Rewards program usage points that can be redeemed for products or services.
  • Referral program rebates.
  • Telephone directory listing.
  • Extended warranties and insurance. Worthwhile if your phone is lost, stolen, or damaged.

Other Fees and Charges

Other charges may apply to your account. Ask the service provider before you buy their calling plan.

  • Call management features: Voice mail, caller ID, call forwarding, call waiting, three-way calling, and others.
  • One-time activation fee.
  • Monthly system, network or access charge.
  • Connection charge per call.
  • Directory assistance 411 charge per call.
  • Monthly Emergency 911 charge.
  • Extra local call charges per minute.
  • Long distance charges per minute.
  • For prepaid plans: Automatic top up, even if you don't use the minutes.
  • Number portability surcharge (about $0.40 a month in the U.S.).
  • Additional government charges, usually about $0.50 a month
  • Every time you add, change or drop a feature, or receive a rebate, many service providers will automatically sign you up for another contract. Check with them before you make a change.

4. Popular Promotions

Promotions are used to entice consumers to buy a calling plan. But not all promotions are a good deal. Estimate the total cost of using the plan including any upfront or short-term discounts. Compare the total cost and all the features you get to total cost and features of other plans.

  • Free phone – Usually a basic model. The provider makes its profit from your monthly fees paid over the life of the contract.
  • Unlimited local calls – Outgoing, incoming or both.
  • Reduced monthly fee for two to six months – Make sure you are not paying an unusually high regular fee for the rest of the contract.
  • Unlimited local calls between carrier subscribers.
  • Unlimited local calls during specific hours, such as from 5 to 7 p.m. on weekdays.
  • Online specials – Order from provider's website and get cash discount or reduced startup, cancellation or rate fees.
  • Discount if buy a bundle of mobile, local, long-distance, cable TV or satellite TV services from the same provider.

5. Customer Service

It is important to get help fast when you have a problem with your mobile service, especially if you use your phone for business. The most common consumer problems are billing discrepancies, carriers' response to problems, and deceptive or misleading contract terms.

How you get service is also important. Does the company have Web self-help? Is it useful? What hours of the day are live customer service representatives available to help you? If the service is available, you might not be able speak to a person because the phone-in hold times are too long, especially during peak hours.

Check with friends about their experiences or with your local Better Business Bureau. See how a provider was rated by Consumer Reports or other review agency.

Know the phone numbers or Web address for customer service at your provider.

Billing & Account Problems

  • Discrepancies with invoice amounts and payments.
  • Interpreting your bill. What do all the charges mean?
  • Your payment was sent but not received. Do you have a record of payment?
  • Large providers have a Web-based account information system. Use it to check your account before you contact customer service.

Rate Plan Support

You don't understand the calling plan, coverage, roaming, fees, etc. There is a lot of fine print (fees) in many contracts. You find out about it on your first bill.

What you got billed for is not what you expected. There were extra charges, such as unexplained airtime minutes or unexpected fees. Know where you can check your minute usage. Check for calls to/from unusual area codes or at odd times.

Get a detailed coverage map to compare to your calling history. Are you inside your plan's area?

Confused about roaming? Get a list of the areas or countries that are covered or not.

Do you know what happens when your contract expires? Is it automatically renewed? Maybe with more features or at a higher rate? Find out before it does to avoid surprises.

Handset and Device Support

You cannot use some of the handset's features. Is it a problem with the handset, the calling plan, or the user? In any case, you want to use your phone. Is the manual helpful for troubleshooting.

Know the manufacturer and model of your handset. Do you have free or paid support do you have from your provider?

Poor reception, dropped calls, or no dial tone? These are affected by handset quality, carrier antenna placement (coverage), your location, local terrain, buildings and weather. A persistent problem is likely due to the carrier's network or your handset. Know how to report a coverage problem to your provider.

Services Support

Problems with voice mail, e-mail, messaging, Internet, etc. Try the operation again. If it still does not work, maybe you don't have the right calling plan or the setup is not correct.

Ask a friend with the same service to try the operation. If they can do it, so should you.

6. Wireless Number Portability

Wireless (or mobile) number portability (WNP) allows subscribers of wireless services to keep their mobile phone number when switching service providers. Wireless number portability is available in the US, Europe and parts of Asia.

The phones themselves are not portable. If you switch wireless carriers, you will probably have to buy a new mobile handset.

WNP was mandated in the US by the Federal Communications Commission in November 2003 and became mandatory in the European Union in 2003. WNP was offered in Hong Kong and Singapore during the late 1990s.

It removed a major impediment to U.S.-based mobile subscribers who wanted to switch to another wireless service provider. It allows more choice for consumers.

Prior to WNP, a mobile subscriber would have to give up their existing mobile phone number and get a new one from the new provider. For many people, and especially for businesses, their phone number is important because many people now it. Changing mobile phone numbers would be inconvenient, especially for their friends and customers.

The lack of WNP is an unfair business advantage for the providers of the existing numbers and a disadvantage for its competitors, especially new competitors. WNP levels the playing field regarding mobile phone numbers.

To change your mobile phone number to a new wireless service provider, if possible, you must carefully follow the rules of switching. There are many requirements and precautionary steps that need to be followed to ensure the transfer is completed properly. There are actions you must do at the old provider and the new provider. Check with them before you make the switch.

7. Cell Phone Locks

For marketing reasons, most cellphones work only on one carrier's network. Some phones, such as an unlocked ("hacked") GSM phone, can be made to operate on another carrier's network.

Be careful about pirated or counterfeit SIM cards and lock reprogramming in this somewhat "gray" area of cell phones.

SIM Card

GSM phones use a SIM (Subscriber Information Module) card for locking. A SIM card holds a GSM phone subscriber's mobile phone number and settings necessary for the handset to function.

Some GSM phones are sold in "unlocked" condition. The SIM is programmed by the new wireless service provider for use on their network.

Check that all of the service features you are paying for are available when the unlocked phone is programmed for you.

Service Provider Lock

Service Provider Lock (SP-Lock) is something that most wireless service provider do with the non-GSM handsets (TDMA, CDMA) that operate on their networks. The SP-lock prevents you from using your handset with a different service provider than the one you purchased it from.

Service unlocking codes are unique to every phone handset and are related to its serial number.

Even if your handset is not SP-locked, you probably cannot use it with just any provider? The situation is complicated by different wireless technologies and frequencies. Check with your service provider before you buy the handset or subscribe to the plan.

8. Beware: Calling Plan Pitfalls

Some common pitfalls, tricks or "gotchas" in sales techniques or calling plan contracts are designed to make you pay more. Ask questions and read the contract details before you sign.

  • Automatic enrollment – If you sign up for one feature, you automatically get another (and its fee), even if you don't want it.
  • Upgrade on contract renewal – At expiration, some contracts automatically renew with more features or at a higher rate. Find out before you sign to avoid a surprise later.
  • New feature extends contract term – Add a new feature and your contract is extended for another full term from the date of the change. You might not want the term of your contract extended.
  • Pressure into buying features or services you won't use – such as a data plan or premium service. Know your needs. Don't buy more than you need.
  • Break one rule – in the calling plan contract and get charged a fee or upgraded to a higher-priced service. For example, exceeding a fixed limit of airtime minutes. Ask before you make a change to your contract.

9. Five Factors That Affect Your Cell Phone Bill

In addition to the initial purchase price (less any discounts and rebates) and standard phone system charges, the following five usage factors affect the amount of your mobile phone monthly bill:

Talk time – How much time you talk on your phone, including incoming and outgoing calls? If you pay by the minute, the more you talk the more it will cost you. You will pay more if you exceed the fixed-price call minute limits of your calling plan.

Time of day of call – What time of day you talk most often on your phone? Is it during peak or off-peak times (as defined by your service provider)? You get less discount or pay more for calls made during peak times.

Where you are when you call – Calling from outside your carrier's coverage area can incur expensive per-minute roaming charges. Calling from outside your plan's unlimited calling area can incur airtime charges.

Long distance calls – Over how long a distance do you talk? Longer distances and calls to other area codes or countries have higher per-minute rates. You pay long-distance charges for outgoing calls and likely for incoming calls. You can avoid long-distance charges by using local roaming dial-in numbers, if available from your service provider.

Data transfers – Over certain limits, you pay per megabyte and per minute to download e-mails, messages, ringtones, images, etc. This includes receiving spam (unwanted junk messages) on your phone.

To calculate the total cost of a cell phone calling plan over the term of a service contract, see our Cellphone Calling Plan Cost Worksheet (PDF file for printing).

To calculate the total monthly usage and charges on your landline (fixed wire), long distance and cellular (mobile wireless) phone services, see our Phone Usage and Cost Worksheet (PDF file for printing).

To reduce your monthly cellphone bill, see our 5 Ways to Reduce Your Mobile Phone Bill.

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