Comparing Ultra Cheap Cell Phone Carriers

By Louis DeNicola, Cheapism.com

We identified three ultra-cheap mobile phone carriers that might appeal to anyone eager to escape the burden of costly phone bills. Some plans even start at $0.00 (yes, that's zero) a month. Oh, and there are no contracts or early termination fees to worry about. Compare that to the mobile phone fees at the big four carriers and you'll find hundreds, if not thousands, in savings to be had. And while these carriers don't tack on abstract "administrative" fees, the taxman always cometh.

How can a company offer free, or very cheap, cell phone service? By being a mobile virtual network operator (MVNO). MVNOs buy the right to transmit data, text, and calls from larger carriers at wholesale prices and then sell the services to customers. This means users get the same coverage and service as they would from the primary provider but because the MVNOs don't have to build and maintain the network infrastructure the savings are passed on to customers. New technology has also allowed MVNOs to experiment with further cost-cutting measures and advertising and overhead budgets are kept to a minimum. The one drawback we found with the three services we researched is the lack of support for sending texts with pictures; even when a friend sends a picture text, customers are not notified.

Related: Which cell phone carrier has the lowest fees?

Larger MVNOs, such as Boost Mobile and Virgin Mobile, enjoy some name recognition, but the smaller MVNOs offer the cheapest cell phone service.

*$.01/MB for customers with paid plans.
**Bring Your Own Sprint Device

FreedomPop. FreedomPop may best suit people who rarely use their mobile phone. The lowest-tier plan, which includes 200 minutes, 500 texts, and 500MB of data, is free and subscribers only pay for usage that exceeds these limits. For frequent mobile phone users, an $8 monthly upgrade provides unlimited texts and 500 minutes and $11 buys unlimited texts and minutes; both deals include only 500MB of data. Data overages cost either $.01/MB with the paid plans or $.02/MB with the free plan. Additional data can be earned by inviting friends to sign on or completing promotional offers. Alternatively, data can be shared with friends in the FreedomPop network.

All FreedomPop services run over data lines -- the company's technology can distinguish texts, calls, and Internet use -- so customers need an Internet connection to dial out and receive calls, send and receive text messages, browse the web, and use email. Service quality depends on the strength of the Internet connection, and some users have reported static or delays even with a 3G signal. FreedomPop buys coverage from Sprint and Clearwire.

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Currently, users must purchase a cell phone directly from FreedomPop. Two models are available, the HTC Evo Design and HTV EVO 4G, and both cost $99. FreedomPop's marketing vice president told us that within a year users will be able to sign up with their own unlocked CDMA Android phone. People who live near strong 4G signals or don't mind seeking out Wi-Fi in order to make calls will enjoy the savings.

Mobile United. Mobile United has secured the right to use the same network infrastructure as Verizon and Sprint. Such extensive coverage at discounted rates is a strong lure given that many MVNOs are associated with just one major carrier.

There are no contracts with this company but customers must pay an annual $55 membership fee and can choose among four plans, with price points of $17, $19, $25, and $30 a month. In ascending order of price, the first cheap cell phone plan comes with unlimited talk (no texting); the second includes unlimited talk and text; the third adds 500MB of data; and the last includes 1GB of data. Texts and megabytes over the limits cost $.02 each.

At the moment users must buy a phone from Mobile United ($99 and up, depending on the phone), but soon they will be able to use any unlocked GSM phone. Mobile United is a start-up whose founders have launched a crowdsourcing campaign on IndieGoGo that runs until December 10.

Related: iPhone vs. Galaxy: which Is cheaper to own in the long run

RingPlus. RingPlus is another MVNO that purchases network coverage from Sprint, but this low-cost carrier stands out because its members receive three unique apps along with monthly service. The first is an in-call translator that translates between English, German, French, Spanish, Italian, and Russian. The second is an option to record and transcribe conversations (both sides on the call are notified), whereas voicemails are always transcribed and emailed to the customer. The third is Ringback Tones, a radio app that lets users listen to music or the news instead of a ring when making calls.

At present, subscribers must bring their own unlocked Sprint device, but RingPlus is creating a marketplace where the company and members can sell, trade, or auction cell phones. Cheap cell phone plans range from $6 to $35 a month with the lowest tier being pay as you go -- $.02 for each minute, text, and MB of data -- and the most expensive including unlimited voice and text and 1.2GB of data. RingPlus also offers a completely free ad-supported plan that generates revenue by having subscribers listen to ads instead of a ring when making calls. Enrollment for the free plan opens only occasionally; the next opportunity is December 12, when between two and five thousand lines will become available. According to the company, the supply is often claimed within hours.

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