What is a Mobile Phone Plan?

mobile phone plans

Understanding mobile phone plans

Smartphones have become a staple for consumers. These devices fulfill more than communications needs — their capabilities go beyond phone calls and text messaging, to browsing the internet and streaming television programs from the comfort of our palms.

To perform these tasks, a connection to a network provider is required. These providers enable individuals carry out interactions via cellular networks and, without them, smartphones may as well be useless. In order to fully utilize a mobile phone, one would need to be subscribed to a mobile phone plan.

A mobile phone plan is a paid agreement between a subscriber and mobile carrier that allows the subscriber’s cell phone to use the telco’s network for phone calls, text messages, and mobile data (internet access).

What do mobile phone plans consist of?

Typically, mobile phone plans consist of three service sectors bundled into one:

  • A voice plan;
  • A messaging plan; and
  • A data plan.

1. A voice plan

Voice plans cover incoming and outgoing calls. The service provider grants the subscriber ‘minutes’ or a tariff with which they can make and receive calls over the network. ‘Minutes’ refer to the total amount of time a subscriber can make voice calls within their agreed billing cycle. A tariff is an agreed upon rate for which the subscriber can make calls. Tariffs can be applied per minute as well as per second. Many plans today include unlimited Voice, which usually means you can make as many calls you want, for as many ‘minutes’ as you want, as long as those calls are made to Australian phone numbers.

2. A messaging plan

Messaging plans cover all forms of text (SMS) and multimedia (MMS) messaging. As with voice plans, the service provider allocates a specific number of messages or a tariff to the subscriber per the billing cycle. Most plans today also include unlimited text messaging.

3. A data plan

Data plans are needed for internet access from your smartphone without WiFi. This involves streaming, instant messaging over internet applications such as Facebook and WhatsApp, and casual internet browsing. As with other types of plans, each subscriber is allocated a specific amount of data per billing cycle or assigned a tariff. As far as unlimited mobile data plans are concerned, you won’t find any that’s really unlimited. Telcos that offer such plans usually throttle your speeds to 1.5Mbps (Megabits per second) after you exhaust your plan data, which allows you to remain connected – albeit at slower speeds — until your expiry/next recharge or your billing cycle renews.

Types of mobile phone plans

Different mobile phone-related plans are tailored to suit potential subscribers’ varying needs. Several options are available, and they are grouped into categories.

Australia’s telco market.

The Australian telco market consists of a number of players vying for potential subscribers. Each telco offers a range of plans to choose from. Source: Whatpone

Here are some mobile phone plan terms you might have heard:

  • Prepaid plans — With a prepaid plan, the subscriber pays for the service upfront. The service fee must be paid fully before the service will be rendered.
  • Postpaid plans — Postpaid plan subscribers pay for the service after it has been rendered.
  • Phone plans — Phone plans are contractual agreements between the telco and the customer. They offer eligible subscribers the opportunity to purchase a mobile device alongside a SIM plan, without paying upfront for the device. Instead, the device is paid off in monthly instalments, usually over a 12-36-month period.
  • SIM Only plans — With SIM only plans, the telco provides the subscriber with a SIM card only. The subscriber uses that SIM card on whatever mobile device they want, which means the device doesn’t have to be tied to the plan or telco, or purchased from the telco.
  • Contract — Contract SIM plans are paid agreements between a telco and a subscriber, where the telco will provide voice, SMS, and/or data service to the subscriber for a lengthy period of time.
  • Pay-As-You-Go Plans — As the name implies, Pay-As-You-Go (PAYG) plan subscribers pay for the services as they use They agree on a specific tariff plan with the service provider and they are charged according to how they use the services. PAYG plans may be enticing as you really only pay for what you use, but they can be expensive for heavy mobile – particularly – data users.
  • Unlimited plans — Unlimited plans grant subscribers unlimited access to particular services across the network. Unlimited access can be granted to call and text plans, and some data plans claim to be unlimited. On these plans, subscribers may use the services on the network as they please. It’s important to note, however, that many telcos offer clauses alongside unlimited plans. These clauses may include data caps (or throttling to 1.5Mbps after allocated plan data is exhausted, as previously mentioned), restrictions to call certain numbers, and many others. Take a closer look at the fine print before committing to an unlimited plan.

Australians want unlimited mobile data.

Although 37 percent of Australians want unlimited data in their phone plans, there aren’t any data plans that provide unlimited data at the actual speeds in your plan data. Unlimited data plans usually throttle data after plan data is exhausted. Source: Whatphone

Final words

Mobile phone plans are a necessity for mobile phone users. There are a myriad of options to choose from when thinking of committing to a phone plan. Whatever the case may be, you are certain to find a phone plan that adequately caters to your needs. Be sure to take a close look at the fine print associated with any and all phone plans before you decide to commit.


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.