Mobile phone plans buying guide

Confused by the ins and outs of mobile call plans? Our guide can help you.
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01 .Mobile phone plans

Guy on phone

Finding the right mobile phone plan can be a daunting task. Which provider has the best coverage in your area? Pre-paid or fixed-term contract, and if contract: what monthly amount?

There are hundreds of plans available. Answering the questions we outline in this article can help you find a call plan that meets your needs.

Please note: this information was current as of March 2009 but is still a useful guide to today's market.


GSM, or 2G covers the major population centres of Australia (95% of the population), although actual coverage varies among networks (Telstra, Optus and Vodafone). Check the networks' coverage maps to see if the areas where you'll use your phone are covered.

You can use your phone overseas, although there are limitations: the phone's bandwidth has to be compatible with the system in the country/ies you're visiting, and your phone service provider has to have roaming arrangements there. Plus it's usually expensive. It also offers flexibility in moving between different networks and a good choice of handsets.


Third Generation or 3G describes wireless communication involving video phone calls and sophisticated internet services. Currently 3G is offered by Telstra, Optus, Vodaphone and 3. However, video calling may be limited to major metropolitan areas.

Check the networks' coverage maps to see if the areas where you'll use your phone are covered.


NextG, or Next Generation is a Telstra service. Think of it as 3.5G. It claims to cover more of Australia than any other existing 3G network. Next G has replaced CDMA services with a coverage area that exceeds that of the CDMA network, giving 99% of the Australian population access to 3G mobile telephony and wireless broadband. Optus has also rolled out its version of 3.5G, called 'Yes'G, claiming to cover 96% of the population.

See our article on NextG.


Do you want to commit yourself to a postpaid service with regular bills, or would you be better off with a prepaid service?

Postpaid plan

  • Fixed-term contracts or plans range from one month to 24 months (or occasionally even more), and have a minimum monthly service charge, which usually includes a certain value of calls. They may (but don’t necessarily) include the cost of a handset.
  • Postpaid plans tend to have cheaper call rates, especially for medium- and higher-usage plans.
  • Costs can escalate out of control — something to consider if you’re on a tight budget. Some services offer bill capping (where you nominate a maximum monthly spend), although the minimum cap we found is still quite high.
  • Some carriers have unlimited capped plans. A higher monthly fee allows you unlimited usage (within the fair use policies of the carrier).
  • If you want to quit a plan early, there may be penalty exit fees.
  • If your plan includes a number of call credits and you overestimate your mobile usage, you won’t use them up; if you underestimate you may end up paying higher per-minute call rates than you would on a heavier-use plan. A tip is to use a prepaid plan first to check your usage.
  • Before signing up to a long-term plan, think about the length of commitment and minimum total costs; find out if a handset is included in the cost or if it’s extra; establish the costs and penalties involved in paying the plan out early, and whether you can change to a higher- or lower-usage plan at any stage.


  • With prepaid you buy a starter kit (with or without a handset), which gives you access to the phone network and a dollar amount of call credits. When that runs out, you can ‘recharge’ your call credits and extend network access.
  • A prepaid service gives you tight control over call expenditure, and is ideal if you’re watching your budget or if the phone’s for a youngster. Be careful using 0055 numbers, as these use up future credit. You could end up in a situation of topping up your phone just to pay off the charges you have already been billed and be left without any credit.
  • If this is your first mobile phone, using a prepaid plan will give you a rough idea of how much you’ll use it, so you can estimate more accurately the best service (pre- or postpaid) for the longer term.
  • Prepaid tends to be the cheapest option for people who don’t make many calls.
  • Even if you don’t have any call credits remaining, you can still use the phone to make 000 calls and receive calls for a limited time (possibly up to 12 months — ask providers for details).
  • You won't receive a bill. However, you can check your call credit status at any time (usually via a free-call number), and receive reminders (beep or message) when you're getting low on credit.
  • The call credits may expire after a certain time, so use ’em or lose ’em. Some carriers allow you to carry over unused credits for up to 12 months such as Vodaphone and its resellers.
  • International roaming isn’t available from all providers. An alternative with GSM phones is to buy a prepaid SIM when you get there, which may be cheaper than roaming anyway, although you’ll have a different number.
  • If you want to go to another network, you may have to pay what amounts to an exit fee (ostensibly a fee for removing SIM security locks). Different networks have different policies — check before you buy.
  • Look into how and where you can recharge your call credits (with many you can recharge over the phone or web; other ways include going to a dealer outlet, service station, convenience store or ATM); how long the credits are valid; and the minimum recharge amount.

You have two basic choices when it comes to a handset: bring your own (either one you already have, or a new or secondhand one you’ve bought outright), or get a new one in association with a plan.

Some fixed-term plans that offer a particular phone include its price in their monthly charge. With others you can buy a new phone of your choice in monthly instalments, but separate from the plan itself. In both cases you’ll have to pay out the price of the phone if you leave the plan early.

If you get a phone with a plan, you’re looking at between $5 and $50 per month for the phone. If you’re buying one outright, prices for new phones range from less than $100 to over $1000. Buying secondhand is an option worth considering.

Don’t be fooled by ads for $0 phones — they’re usually $0* phones, and * means you’re tied into a fixed-term contract that includes your paying for the phone in instalments for the duration of the plan.

Most 3G mobile phones now come with internet usage entailing a data plan, but before signing up for one make sure you find out the download and excess amounts. See out article on smartphone data downloads to avoid bill shock.

Going over the data allowance can lead to the nasty shock of extra charges per megabyte (a measure of data). Talk to people you know already on a data plan to see how it works for them and the features the plan includes.

Always be wary of the terms 'free', 'capped' and any other marketing terms used to sell you the plan - always read the terms and conditions. Get all the facts on the limits and extra costs you’ll be charged for going over these limits.

Go low

If you don't know how much data you will use, go for the lower end and monitor your usage. If you want to upgrade your data usage, it’s likely you can do so without charge. If you find you are wasting money because you don't use the internet via your phone often, it can cost to downgrade your plan.

Many carriers have the option of monitoring your usage either online or via their customer service. Some phones have the option of monitoring the usage via the settings on the phone. It's useful to be able to reset the usage rate each billing period.

Wi-Fi access

Some phones have Wi-Fi access so you can roam to a personal network or wireless hotspot. This means you don't need to use the internet plan via the network. A phone that lets you monitor both 3G internet access and Wi-Fi usage is a useful feature.

Specific mobile-oriented sites can save you data as they minimize the graphics and stick with the essentials. Remember, video sites will chew up your data allowance, so avoid them if possible.

Some mobile applications and newsfeeds have regular updates - be sure to take these into account before installing, or turn this feature off if possible.

After making the basic decisions about the kind of service and handset you want, it’s now down to the business end — getting a good deal.

What kind of user are you?

Before looking into the hundreds of deals and packages out there, you need to decide what kind of user you are. How many calls are you likely to make, at what time of day are you likely to make them, to what type of phone (landline or other mobile) and where to (local, long-distance or international)?
For example, do you want a mobile for:

  • Emergencies: You’ll be making short (and hopefully few) calls, potentially at any time of day.
  • Social purposes: Calls are likely to be off-peak, and you’ll have greater control over the number of outgoing calls you make.
  • Business use: Your calls will be mainly during peak times and will involve outgoing and incoming calls.
    If you don’t intend to use the phone much but the reality turns out to be different, it could cost a lot of money, so it’s worth thinking carefully about your likely usage pattern before you sign up. You also don’t want to pay for a plan that has more calls than you need.

Discount options

Other things to consider when looking into the details of plans are who you call, when you call and how you call (voice or SMS). Many services offer discounts for same-network calls and cheap rates for nominated numbers, cheap long-distance calls in off-peak times and packages with free or cheap SMS. Contact service providers or see their websites for details.

Accessing other services

Most mobile services now come with voicemail. But there’s an increasing number of other services either available now or on their way, such as:

  • Call waiting.
  • Directory services.
  • Short message service (SMS).
  • Caller ID.
  • Paging.
  • Internet access.
  • Email notification.
  • Receiving faxes.
  • If any of these services sound attractive to you, find out what’s on offer from the service providers and how much you’re going to be paying.

Changing plans? Keep your old number

If you’ve decided to change to another network, you’ll probably want to keep the same phone number. Transfer your number to your new provider before cancelling your connection with your old provider.

One reason buying a mobile phone plan is so complicated is that there can be several different companies involved (often referred to as ‘providers’) or the same one could provide the network, service and billing.

The network

Optus, Telstra, 3 and Vodafone are called carriers: they own, operate and install network infrastructures for mobile phone services.

Service providers

These companies supplement and compete with the carriers by buying services from them and repackaging them for sale to you. They may provide customised billing, and generally have more personalised service and a greater range of plans.


In a mobile phone shop you can generally buy a range of phones and plans. However, the contract is with the service provider or the carrier, not the retailer.

The call plan

This is how you connect to the network, and it may be with a carrier or via a service provider.

If you already have a mobile phone and call plan but suspect it’s not the cheapest for your usage pattern, have a look at your latest bill to figure out:

  • How many calls you make a week.
  • If they’re mainly during business hours or at the weekend.
  • If you stick to the ‘free calls’ included in your plan (if you have them), or make a lot less or a lot more than are built into the monthly charge.
  • If you’re calling other mobiles or ordinary phones.
  • If you’re mainly calling your local area, or using the phone for long-distance or even international calls.

If your usage pattern doesn’t correspond to what your call plan provides, you could be wasting money. You may be able to upgrade your call plan during a contract, but cancelling or downgrading to a cheaper plan probably means you’ll have to pay out the old one, so it may not be worth changing till the end of the contract period.

If you discover your phone is missing:

  • Call your network provider and ask it to block your SIM card. If you don’t suspend your service, you could be liable for any unauthorised calls.
  • Report it to the police and make sure you provide full details of when and where it was lost or stolen, the phone make and model number, and the International Mobile Equipment Identification (IMEI). Every phone has an IMEI number. It’s usually on a plate behind the battery with the pattern xxxxxx/xx/xxxxx/x, or you can get it by keying in *#06#. Write it down and keep it handy.

If you have to replace your phone it’s likely to cost a lot more than the nominal handset price you pay when it’s part of a phone plan.

Most phones have a 12-month warranty, but many connection contracts are for longer. If your phone breaks down when it’s out of warranty, you’ll have to pay to have it fixed.

An alternative to buying a new phone if yours is stolen is to have mobile phone insurance that covers the cost. Some mobile phone plan contracts include it. Read your insurance contract carefully before signing so as to understand the implications of any fees such as monthly charges, or excess charged on claims. In some cases, the excess may exceed the cost of the phone.

If you decide not to replace your phone, you’ll still have to pay out the plan until the end of the contract period, even though you won’t be using the service. You can keep doing this on the usual monthly basis or simply pay out the rest of the contract as a lump sum, called the eligible termination charge.

Mobile phones have been identified as a major reason for youth debt — although more often than not it’s parents or other guarantors who get lumped with a ginormous bill. The high cost of SMS is a big part of the problem in this age group. It’s not unusual for teenagers to send hundreds of SMS each month — sometimes having protracted ‘conversations’ — and it all adds up.

SMS seems cheap, at only 25 cents per message or even less. However, costs in other countries are less than half this, and considering an SMS only uses a second or so of airtime, the rate here is vastly overpriced.

Then there are premium-rate SMS services (typically 55 cents per message), which people are encouraged to use for voting on reality TV shows and to enter competitions. The growing appeal of MMS (sending pictures, video, etc), which is usually more expensive than SMS, will further challenge tight budgets.

Another concern for young users is the emergence of m-commerce: you use your mobile phone as a de facto charge card for goods and services, and pay when you get your phone bill. Like SMS, the amounts each time might be trivial (a couple of dollars for a soft drink or parking meter payment), but it can amount to a lot at the end of the month.

Pre-paid to reduce debt

The best way of avoiding debt problems is to get a prepaid service. Then you only spend when you’ve got money, and if you’ve run out you can still use the phone for genuine emergencies (000 calls) and to receive calls.

Be careful using 0055 numbers, as these use up future credit. You could end up in a situation of topping up your phone just to pay off the charges you have already been billed and be left without any credit.

Other means some companies offer for keeping track of how much you’re spending include spend alerts, where you get a message to tell you you’ve reached your nominated spending level for a given period of time (one month, say), or a toll-free number for checking your account balance. These apply to postpaid services; the latter also to prepaid.

If your kids — or you — send lots of SMS, look to save money with a plan offering cheap SMS or a large ‘free’ allowance. For GSM services check out Phonechoice for the cheapest SMS charges.

And finally, resist the urge to have SMS conversations: “where r u” — “@ bus stp” — “wen wil u b here” — “in 10” – “c u then!” — “gr8!” — “ciao” — “bye”. Scintillating stuff, and no doubt mildly entertaining, but worth about $1 of calls each? Probably better to just call — or simply w8.

You can change from one company to another at will, taking your current number with you. The Australian Communications Authority thinks the whole process shouldn’t take more than a few hours.

This is really good news if you’re looking for the best deal, because you can change companies at will, without having to contact everyone you know to give them a new contact number. If you’re running a small business this could be a substantial saving.

But it’s not all good news. There are some traps that you’ll need to keep in mind:

  • When you leave your current provider your contract will end, but you may have to pay cancellation fees as well as all outstanding call charges, etc, so you may be better off waiting till the contract expires. Also look carefully at the conditions of your new contract.
  • If you’ve got a prepaid package you may need to get the handset unlocked before you can move to a new provider, and there could be a cost for this service.
  • Personal SIM locks also need to be removed before the transfer can take place.
  • Don’t cancel your existing service before moving. Only active numbers can be transferred, so cancelling before you move will render your current number unavailable.
  • You don’t have to keep the same handset, but make sure you take the cost of a new one into account when looking at your new contract.
  • Only the person who signed the existing contract can move the number to another provider. If you think you’ve been moved without your knowledge, contact your original provider.

Are you on the cheapest call plan for your usage? Phonechoice has a database that contains hundreds of call plans. Check whether any of them offers cheaper call costs than your current plan. To do that, you’ll need a recent typical mobile bill - and do a bit of homework.

Work out for each call on the bill which of the following categories it falls into:

  • Local (up to 165 km from where you’re calling; peak/off-peak).
  • Long-distance (peak/off-peak).
  • Mobile-to-mobile (same network; peak/off-peak).
  • Mobile-to-mobile (different network; peak/off-peak).
  • Check how many voicemails you deposited and retrieved.
  • Check how many SMS you sent.
  • Then click on the link to the call counter, which allows you to easily add up the number of calls and total call time in each call category.
  • Enter all the information into the calculator as required.
  • Also select whether you’re after a plan for personal or business use, whether you need a new phone, and the network you're interested in.

The results page will give you a list of plans ranked in order of call costs, with the cheapest on top. The table contains some basic call cost information for the plans. If you want to check out the terms and conditions of a particular plan, click on the plan name and the details will pop up in a new window.

If the plan has any handsets attached to it, you can find them by scrolling to the bottom of the new window. We may have test results for the model you're interested in. Check out our article on GSM and 3G phones.

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