What is the Best No Contract Phone Plan?

girl using a phone

What is a no contract phone plan?

Telecos have provided their subscribers with service plans alongside mobile devices for a long time. Traditionally, when a customer opts to purchase a mobile device from a telco, they enter a service contract with the telco that sells the phone.

Such a deal usually means the device is sold at a subsidized price, and the customer pays off the costs in installments over a designated period of time. This is called a contract phone plan. ‘No Contract Phone Plans’ are the opposite of this scenario.

No contract phone plans are sold without any agreement between the customer and the telco. Unlike contract phones, these phones are not tied to a specific carrier or mobile plan. Smartphones purchased this way are generally pricier than if purchased on a contract that involves installment payments over a period of time.

Outright purchases with no contract phone plans typically include a trial period. After the trial period, which is often 30 days, the customer owns the phone, and penalties for canceling are based on months of usage

Types of no contract phone plans

If you’re thinking about subscribing to a no contract phone plan, you have two options — either a prepaid phone plan or a SIM only phone plan.

A breakdown of Australia’s phone service plan market.

Prepaid plans take up 45% of the Australian mobile phone service plan market. Source: Whatphone

  • Prepaid phone plans: With a prepaid phone plan, the subscriber must pay the fees in full before service can be rendered. Once perceived as the least glamorous service of any network operator, prepaid plans have fast gained traction over the last few years. This can be attribute to the numerous advantages that come with these plans, centered around their flexibility in allowing the customer determine the services they need.Currently, all major Australian telecommunication operators, as well as numerous MVNOs, offer prepaid plans to their subscribers. Take a look at some of the best prepaid plans Australian operators have to offer.
  • SIM Only phone plans: SIM only plans — as the name implies — are phone plans in which the network provides the subscriber with a SIM card only. With this SIM card, the subscriber will be able to access Services on the network including calls, text messages and data activity. This can be done with any Internet capable device, such as a smartphone.For these type of plans, the subscriber will need to bring their own Internet capable device where the SIM card will be activated. The telco won’t provide any mobile devices. Take a close look at the best Sim only plans Australian telecommunication operators have the offer here.

Pros and cons of contract plans

All phone plans have their positives and negatives, and contract plans are no different. One positive on contract phone plans is that subscribers pay less for their devices. Devices on contracts are often subsidized by the carriers who sell them, as well as insured. Subscribers on contract plans also receive priority on the network when it experiences congestion.

On the flip side, subscribers with phone contracts have less freedom. If they are unsatisfied with the services rendered, they’ll be unable to leave the plan or telco without penalty. Penalties include the Minimum Total Cost (MTC) and early termination fees ascribed to the device.

Pros and Cons of No Contract Plans

Here’s a couple of pros and cons associated with No Contract Phone Plans.

First, no contract plans afford users flexibility. They incur no termination fees which are often hefty, allowing the customer to leave whenever they please. Subscribers are free to switch between telcos and phone plans as they are not locked into any contracts. No contract plans are also predictable, allowing a customer to know the exact amount of inclusions on the plan, which means no bill shock.

On the other hand, no contract plans do not offer subscribers installment phone plans. Subscribers must have their own devices which will then be activated on the network.

Final words: What’s best for me?

When placed alongside contract phone plans, no contract phone plans pose a lot of advantages to subscribers. In the long run, however, the choice of plan to subscribe to on any telco is purely dependent on the subscriber. Make sure to read the fine print.

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.