Mobile phone plans don't have to be complicated. They're made to seem that way because the harder your decision is, the more likely you'll buy whatever's put in front of you. This guide will help you work your way through the maze of mobile phone plans to make sure you choose the one that gets you the most calls for your cash.

Getting a good deal

Before looking into the hundreds of phone and plan packages out there, you need to decide what kind of user you are. Think about:

  • how many calls you're likely to make a day, and multiply that by around 30 to get a monthly average
  • what time of day you'll use your phone the most
  • what type of phones you're going to call the most (landline or other mobiles
  • where you'll you be calling (local, long-distance or international)
  • how much data you're likely to use, or how much media like music or video you think you'll download onto your phone every month.

Pre-paid or post-paid?

This is the big decision, really. Think about it from the perspective of "Sure, post-paid usually has some good deals, but do I want to commit to a monthly bill? Or will I just top up when I need to?". Some people are better at budgeting with a routine, while others are more likely to use their phones sporadically and will find it costs more to be locked into a contract than they might otherwise use on a need-to-buy basis.

Here's a quick run-down of the features, pros and cons of each scenario:

Post-paid plans

These are usually 12 to 24 months with 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, which can make a brand new phone easier to pay off in instalments.

  • Post-paid plans may 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 can be 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, with some carriers insisting you pay the rest of the contract out – check the fine print carefully.
  • If your plan includes a number of calls or minutes 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.  If you're unsure, consider using a pre-paid plan first to find out your usage patterns.
  • Before signing up to a long-term plan, think about the length of commitment and minimum total costs; it's also a good idea to find out whether you can change to a higher- or lower-usage plan at any stage without penalty.

Pre-paid plans

With pre-paid plans you buy a starter kit (with or without a handset), which gives you access to the phone network and a dollar amount of calls and data. When that runs out, you can 'recharge' (or, put simply, buy more) call credits and extend your network access (which is limited to a set period depending on how much you pay, which means you can't use your pre-paid credit over the course of, well, forever. You have to use 'em or lose 'em!).

  • A pre-paid service gives you tight control over call expenditure, and is ideal if you're watching your budget or if the phone's for a child or teenager.
  • Pre-paid tends to be the cheapest option for people who don't make many calls, or make calls in high volume sporadically.
  • 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 or online), and receive reminders (beep or message) when you're getting low on credit.
  • The call credits may expire after a certain time, so you either use them or lose them. Some carriers let you carry over unused credits for up to 12 months.
  • International roaming isn't available from all providers. 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 online; other ways include going to a dealer outlet, service station, convenience store or ATM), and check how long the credits are valid for, aw well as the minimum recharge amount.

BYO plans

Some fixed-term plans offer a particular phone included in its price in their monthly charge, or alternatively 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.

  • Buying second-hand is an option worth considering.
  • Don't be fooled by ads for $0 phones — they're usually $0* phones, where * means you're tied into a fixed-term contract that includes your paying for the phone in instalments for the duration of the plan.

Networks

GSM, or 2G covers the major population centres of Australia. Check the networks' coverage maps to see if the areas where you'll use your phone most are covered.

Third Generation or 3G includes video phone calls and internet services as well as voice calls. Currently 3G is offered by Telstra, Optus and Vodafone. However, video calling may be limited to major metropolitan areas.

NextG, or Next Generation, is a Telstra service. Think of it as 3.5G. It claims to cover 99% of the Australian population. 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.

4G, or Long Term Evolution (LTE) is a wireless standard to deliver faster online performance to your mobile phone. The most important thing to understand is that 4G or LTE are all about sending and receiving online data faster, not providing clearer phone reception or wider coverage. The good news is that if the telcos decide to provide data plans that are reasonably priced, which they seem to be doing, you can expect to get the same quality online experience when you are out and about as you would get at home using wireless broadband. Look out for 4G or LTE support on your next smartphone if you want an online performance boost.

4G started out on the Telstra network with a very limited area (serving around 40% of the population) but has improved dramatically over time. Other telcos, such as Optus and Vodafone, now have 4G networks using the current Australian 4G network 1800MHz band so you should be pretty good to go in most places around Australia. Check with your telco for more detailed coverage map information.

Heading overseas?

It's possible to use your phone when you're on holiday overseas, but there are limitations. The phone's bandwidth has to be compatible with the system in the country you're visiting, and your phone service provider has to have roaming arrangements there. Plus, it's usually incredibly expensive.  

An alternative with GSM phones is to buy a pre-paid SIM when you get there. This may be considerably cheaper than paying roaming charges, and the only drawback is having a different phone number while you're travelling – but for so much less money, it's a good deal really.

Data usage

Going over your allocated data allowance can lead to the nasty shock of extra charges per megabyte. Talk to people you know who are already on a data plan to see how it works for them and the features their plans include.

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 to see what you're really getting. Get all the facts on the limits and extra costs you'll be charged for going over these limits.

Wi-Fi access

Almost all new smartphones 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, saving you data usage. A phone that lets you monitor both 3G internet access and Wi-Fi usage is a handy feature.

Go low

Many carriers let you monitor your usage, either online or via their customer service. Some phones even 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.

Discount options

Many service providers offer discounts for same-network calls, and cheap rates for nominated numbers, long-distance calls in off-peak times, and packages with free or cheap SMSs.

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. If any of these services sound attractive to you, find out how much extra you're going to be paying.

Who am I paying?

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

The carriers

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. Examples of service providers include Internode and Dodo.

Retailers

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.

Portable numbers

You can change from one company to another at will, taking your current number with you as well as your business. Generally it shouldn't take more than a few hours. This is really good news if you're looking for the best deal, because you won't have to contact everyone you know to give them a new contact number.

Also, if you're running a small business this could result in a substantial saving for you – a small business can't afford to be uncontactable for long, or have their contact details change. But it's not all good news:

  • 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 to make sure you're not jumping into the same deal as you are trying to get out of.
  • If you've got a pre-paid package you may need to get the handset unlocked (untethered from the network) before you can move to a new provider, and there could be a cost for this service.
  • Only active numbers can be transferred, so cancelling before you move will render your current number unavailable.

Cost

Plans range in price from under $20 a month for a prepaid plan if you have your own phone, to $150 or more per month for heavy usage and a smartphone included.