What is a SIM Only or BYO phone plan?

What’s a ‘SIM only’ plan ?

More than 60% of Australians now buy their phone outright and add a SIM Only plan to it. The proportion of people who interact with their telcos in this way has increased substantially for the last few years. Overseas, especially in the USA, the trend is happening even faster. There’s a reason for the rapid growth of the phenomenon. Phone companies want to get away from selling contracts with phones. It causes problems with their finances and, really, they want to sell network services – that’s their bit. When they sell you an iPhone under contract, they’re helping Apple, not themselves.

SIM Only plans are agreements between you and your phone company which involve only the provision of a SIM. In strict terms, a SIM Only Plan ( also called a BYO phone plan by some ) can be :

  • Prepaid :
    Prepaid plans are agreements with your phone company in which you pay for network services before you use them. Network services are facilities like the ability to make a voice call to someone, send a text / SMS or download a webpage using the data in your plan.
  • Postpaid :
    Postpaid plans are paid for at the end of the month, rather than the beginning. That is you pay for the network services included in them, at the end of the calendar month. Typically postpaid plans are more convenient. You’ll have to undertake a credit check to be able to use one which precludes the possibility of using them from some. There is less work involved in manually adding value to them and services like roaming are often allowed with less hassle because the telco has your credit card on file and can charge you for what you use.
  • PAYG  ( Pay As You Go ) :
    PAYG plans are surprisingly popular in Australia. If you receive a lot more phone calls than you make, they could be right for you. These too are charged monthly, usually in arrears.
  • Data Only :
    Data only SIMs can be used in Mobile Broadband dongles or tablets to connect them to the internet. Most don’t have any voice inclusion at all, they are simply a way to connect a computing device to the mobile internet.

Still not sure on the difference ? You can read more about the difference between prepaid and postpaid plans here.

What is a SIM card?

A SIM ( the SIM in ‘SIM only’ that is ) is a Subscriber Identity Module. It’s the chip the phone company gives you which allows your device to connect to the wireless Telecommunications Company’s ( Telco ) network. It’s a way for Telstra, Optus, Virgin Mobile and Vodafone to know who you are, give you the service you’ve paid for and charge you accurately for it at the end of the month. It’s a little computer chip which you put in your phone that means you can talk away and suck down data on your Smartphone.

Every phone company, big and small, sells these plans. The reality is that SIM Only plans are what the telcos really want to sell.

In the second case, the BYO mobile or SIM only, they only have to cover their network costs. There’s no device to subsidise.

Why is there such a difference between SIM only and ‘with Smartphone’ contracts ?

if you thought you were getting a ‘free phone’ you weren’t. Even if you look carefully for the term ‘free phone’ on a Telco website, you are extremely unlikely to find it. Phones are described as $0 upfront and there’s a reason for that. Getting involved in bundling SIM Plans with phones is a way to lure people in to two year contracts so they don’t leave. Well, in the first case, the plan is only sold with a handset included. The telcos, here Optus, have to get back what they paid for the device in the pricing they offer you. They’ve bought the device and bundled it in with the plan.

If you already have a mobile you love, these SIM Only / BY Own Mobile plans are great options. You get all the low charge per minute of a contract plan and you don’t have to pay for the device. On the other hand, if you want a brand new Smartphone, often the best thing to do is to buy it with a plan. That allows you to split the cost of the device over 24 months. After all, who has the $500+ that most Smartphones cost, sitting around waiting to get used ?!


Sounds good? View & compare SIM only plans

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.