Understand Cell Phone Service & Save Money

In this article, I assume no background knowledge and try to explain as much as possible about the cell phone industry in under 3,000 words. Parts of it are dry, but it’s worth the slog. A typical consumer can realistically save a few hundred dollars per year by taking advantage of the information here.


U.S. Networks

Companies that operate the underlying hardware infrastructure behind cell phone services are called networks. Networks in the U.S. can be split into two categories:

  • Nationwide networks
  • Regional networks

Nationwide networks

There are only four companies that operate their own network infrastructure throughout the U.S. These nationwide networks are sometimes referred to collectively as the Big Four:

  • AT&T
  • T-Mobile
  • Sprint
  • Verizon

Regional networks

Regional networks only have hardware infrastructure in limited geographic areas. For example, U.S. Cellular is a regional operator. It only operates its own network hardware in select parts of the U.S. Regional networks may still offer nationwide service through roaming agreements. I’ll get to roaming in a later section.

Carriers

Wireless carriers are companies that offer wireless service to consumers. Many well-known carriers operate their own networks (e.g., Verizon). However, some carriers don’t run their own networks; these carriers are called mobile virtual network operators (MVNOs). MVNOs piggyback on networks run by other companies. MVNOs typically have their own retail presences and customer support teams, but they resell access to other companies’ networks. Tracfone, Google Fi, and Consumer Cellular are examples of popular MVNOs.

Carriers all have mechanisms for identifying phones that are on their networks. Typically, these mechanisms involve a SIM card. SIM cards are small electronic chips inserted into phones that hold basic information about a subscriber’s service.

Example SIM cards

Network technologies

Network technologies have been evolving. Often, different network technologies are described in terms of generations (e.g., 2G, 3G, 4G, 5G). With each new generation of technologies, there are improvements in achievable speeds and other performance-related metrics.[1]

The latest generation is 5G. However, updating networks to use the latest technology is expensive, and older technologies often continue to work well for many purposes. Accordingly, most of the infrastructure powering today’s wireless networks uses either 3G or 4G technology.

3G

While network operators are gradually replacing 3G infrastructure, it’s still common to find 3G technologies in use. There are two distinct families of technologies used in 3G networks: GSM and CDMA.

  • GSM: Used by AT&T and T-Mobile
  • CDMA: Used by Verizon and Sprint

Typical consumers don’t need to understand how these two technologies work. However, it is worth knowing that both technologies are only compatible with cell phones that have specific radio hardware. A phone that works with CDMA service won’t necessarily be compatible with GSM service (and vice versa). While GSM technology and CDMA technology are both common in the U.S., GSM is far more common globally.

4G

4G is currently the most common technology behind wireless networks in the U.S. All of the Big Four networks use 4G technologies extensively. Unlike 3G, 4G is not split between CDMA and GSM networks; 4G networks are all based on essentially the same family of technologies. 4G networks will often be referred to as LTE networks. LTE is a specific kind of 4G technology.[2]

5G

5G is the latest network technology, and it’s not available in many places. 5G will bring better speeds and lower latency (i.e., shorter delays in data transfer).

I expect we’re something like five years away from 5G coverage being common in the U.S. Despite that, some networks are starting ad campaigns about their up-and-coming 5G services. These campaigns are largely marketing ploys. AT&T has been especially audacious; in some places, AT&T offers service it misleadingly calls “5GE.” AT&T’s 5GE is a 4G technology.

At the moment, I recommend that most consumers wait patiently and avoid paying extra for 5G service or 5G-compatible phones.

Frequencies

Communication between cell phones and networks can happen at different frequencies, and each generation of network technologies can work with a large range of frequencies.

A phone must have compatible hardware to receive service using a particular frequency. A detailed description of a phone’s hardware will usually include a description of which technologies it supports at which frequencies. For example, a list of a phone’s specifications might include something along these lines:

  • CDMA at 850 and 1900 Mhz
  • 4G LTE bands 2, 4, 12, 13, 25, and 41

The word “band” indicates a range of frequencies that a phone is compatible with. For example, band 2 includes transmissions between 1850 and 1990 Mhz.

Networks sometimes overlap in the bands they use. For example, several U.S. networks use LTE band 2. However, there are also network-specific bands; e.g., T-Mobile is the only Big Four network that uses LTE band 71.

Phones sold by a carrier will usually support most of the bands that the carrier uses. However, phones sold by one carrier won’t necessarily support the majority of bands used by other carriers.

Phones that are compatible with only some of a network’s bands might still be able to connect to that network. However, performance may be seriously impaired if important bands are missing. For more about the specific frequency bands used by each major network in the U.S., I recommend this article from PhoneArena.

Cross-network compatibility

For a phone to be compatible with a network, it must support some of the technologies and frequencies the network uses. However, that doesn’t guarantee compatibility. Phones bought directly from carriers are often “locked” to the carrier. A phone locked to T-Mobile won’t work with AT&T even if there is overlap in the technologies and frequencies used by both networks.

Carriers will generally unlock phones if specific criteria are met. However, those criteria vary between carriers. I discuss them in detail elsewhere.

Even an unlocked phone with support for a wide range of technologies and frequencies isn’t guaranteed to be compatible with all networks. For example, Sprint has a whitelist of allowed phones. If a phone isn’t explicitly listed, Sprint will not activate it.

I highly recommend buying phones directly from manufacturers rather than from carriers. While AT&T and Motorola both sell a phone called the Moto G6 Play, each company sells a slightly different model of the G6 Play. Models sold by manufacturers usually come unlocked. They also tend to have hardware with more extensive compatibility across networks than carrier-specific models.[3]

I especially recommend phone models on my list of nearly universal unlocked phones. I expect these devices will perform well on all of the major U.S. networks.

Roaming

Roaming occurs when a phone receives service from a network other than the network it usually connects to. This change in networks occurs without a subscriber changing his or her phone number or SIM card. Roaming is possible when a roaming agreement is in place between a subscriber’s host network and another network a subscriber happens to be in range of. Roaming is often split into two categories: domestic and international.

Domestic

Domestic roaming occurs when a cell phone user accesses a network other than his or her typical network while within the U.S. Policies around domestic roaming vary. Sometimes carriers charge for every minute, text, or megabyte used while roaming. More often, carriers include domestic roaming in their regular prices. While roaming, carriers may impose limitations. For example:

  • Limits may be placed on data speeds.[4]
  • There may be caps on how many texts, minutes, or megabytes of data a subscriber can use.[5]
  • Some activities may be prohibited while roaming (e.g., voice calls may be allowed while data access is prohibited).[6]

International

International roaming occurs when a subscriber accesses a network in another country. As with domestic roaming, international roaming policies vary. Some carriers offer extensive international roaming without additional fees (e.g., Google Fi). Other carriers may charge significant fees for most international roaming (e.g., Verizon). In some cases, especially with small carriers, international roaming may not even be possible. For those who are unable to roam internationally at reasonable rates, it’s often possible to purchase inexpensive SIM cards from other countries’ own carriers while traveling.

Pricing

Most customers purchasing service directly from the Big Four carriers have postpaid service. With postpaid service, customers are billed after each month of service. Typically, users know the base price of the service they signed up for, but users may pay additional fees, taxes, or charges beyond the base price.

Most of the Big Four carriers also offer prepaid service.[7] With prepaid service, customers pay a price upfront for a particular duration of service (usually one month). Most MVNOs also use a prepaid pricing structure, but there are exceptions.[8]

In general, postpaid service from the Big Four carriers tends to be more expensive than comparable prepaid plans offered by the same carrier. Prepaid service from a Big Four carrier tends to be more expensive than service from MVNOs that piggyback on the same network. That said, there are plenty of exceptions to these general trends.

While postpaid service tends to be the most expensive, it typically comes with the most perks. There’s often a decline in roaming access, customer support quality, and device promotions as you move from postpaid service with a given Big Four carrier, to prepaid service with the same carrier, and onto service offered by MVNOs using the same network. Again, there are plenty of exceptions to the general trend; Ting is an MVNO, but it provides customer service that blows the Big Four carriers out of the water.

Examples

For illustrative purposes, let’s say a couple is searching for two lines of service and wants to have unlimited minutes, unlimited texts, and at least 4GB of data for each line.[9] Here are the best deals I could find for service running over T-Mobile’s network (as of September 2019):[10]

  • T-Mobile postpaid – $90 per month ($45 per line)
  • T-Mobile prepaid: – $70 per month ($35 per line)
  • Mint Mobile (an MVNO that uses T-Mobile’s network) – $40 per month ($20 per line)

Repeating the same exercise for service over Verizon’s network:[11]

  • Verizon postpaid – $110 per month ($55 per line)
  • Verizon prepaid – $60 per month ($30 per line)
  • Total Wireless (an MVNO that uses Verizon’s network) – $57 per month ($28.50 per line)

The couple in this example could save about $500 per year by choosing Mint Mobile’s service instead of postpaid service from T-Mobile.[12] Alternatively, they could save around $600 by choosing Total Wireless’s service over Verizon’s postpaid service.[13] That said, price shouldn’t be the only factor considered when choosing a carrier.

Service quality

I’ve written numerous articles covering evaluation methodologies and results from companies that evaluate wireless networks. I’m inclined to believe the Big Four networks differ substantially in terms of quality and reliability at the national level:

  • Verizon (best)
  • AT&T
  • T-Mobile
  • Sprint (worst)

Network-imposed limitations

Networks sometimes impose limits on subscribers. These limits often help the operator to maintain network performance. The limits may also allow networks to create pricing tiers with different levels of service quality.

Prioritization

Prioritization policies govern how a network will handle traffic when it’s congested. Each network has its own policies. In general, prioritization differences will only matter for data access.[14]

The following are general principles around prioritization of data use:

  • Postpaid, non-unlimited plans almost always have higher priority than MVNO plans
  • Postpaid, non-unlimited plans often have higher priority than prepaid plans offered by the same carrier

When a network becomes congested, a low-priority subscriber may experience substantially reduced speeds. Accessing the internet during periods of congestion can be annoying or even impossible for low-priority subscribers. That said, congestion is rare in most areas.

Throttling

Throttling occurs when data use is limited to a specific max speed. A few MVNOs subject their subscribers to a throttle by default. For example, Cricket Wireless limits most of its customers to a max speed of either 3Mbps or 8Mbps for typical data use. Throttling may also be imposed on plans that surpass a specified data use threshold. For example, some carriers’ unlimited plans are throttled after a certain amount of data is used during a given month. There are also an increasing number of carriers that offer free data at slow (128Kbps) speeds after a subscriber has used all of his or her allotted data.

Throttling can also be specific to certain types of data traffic. It’s becoming increasingly common for carriers to limit video streaming to a maximum quality level.

Strategies for consumers

With some appreciation for the technology behind networks, knowledge of the landscape of the wireless industry, and a bit of effort, consumers can often save a lot of money.

Understand networks in your area

Understanding the quality of each major network in your area can make it much easier to find a carrier that’s well-matched with your needs. While Verizon has the most reliable network at the national level, it won’t necessarily be the best network in your area. There are plenty of places where the underdog networks, Sprint and T-Mobile, outperform other networks. If you happen to be in one of these areas, that’s valuable to know. Sprint and T-Mobile both tend to offer plans that are much cheaper than comparable plans offered by AT&T and Verizon.

I recommend asking friends and neighbors about their experience with different wireless networks. If you’re feeling inclined, consider checking out my guide to evaluating networks with the help of third-party performance data.

Start small

Lots of people end up on plans that are mismatched with their usage levels. Sometimes these people spend years paying for far larger allotments of texts, minutes, and data than they ever use. It is smallest allotment of minutes, texts, and data that you think might be adequate. If you end up needing more minutes, texts, or data in a given month, you can upgrade your plan.

Limit data use

One advantage of starting small is that it encourages people to keep tabs on their data use. People have a much stronger incentive to reduce their data use if they know they are approaching their plans’ data allotments. Many people can cut their data use by over 50% without a lot of inconvenience:

  • Remember to automatically connect to Wi-Fi in your home and possibly other areas you spend a lot of time in.
  • Avoid making large downloads over cellular connections and set apps like Spotify to only request downloads over Wi-Fi.
  • When possible, download songs and videos while connected to Wi-Fi instead of streaming them on-the-go.
  • Set limits on data use that you gradually increase each time you hit the limit. For example, if your plan gives you 6GB of data each month, start the month with a 3GB limit. If you hit that limit, increase the limit to 4GB. Each time you hit a limit, increase it, but increase the limit by a smaller amount each time.

Try prepaid or an MVNO

Postpaid service can have advantages, but it’s often far more expensive than prepaid service or service from an MVNO. I strongly recommend trying prepaid services. If you don’t like a prepaid service, you’ve usually only paid for a month of service and can easily switch to another carrier.

Many people notice no meaningful differences between prepaid or MVNO services and postpaid services. These people can enjoy significant savings each month, avoid surprise fees, and easily switch to other carriers as they please.

A list of prepaid and MVNO carriers I recommend can be found here. On another page, I have a more comprehensive list of U.S. MVNOs.

Buy widely compatible phones

As mentioned earlier, I recommend purchasing nearly universal unlocked phones directly from their manufacturers. These phones typically don’t cost any more than comparable phones sold by carriers, and these phones make future switches between carriers much easier. I also recommend buying phones outright without any lease options or installment plans. The availability of installment options often causes people to buy fancier phones than they would if they were required to pay a phone’s full price upfront. While this isn’t necessarily a negative thing, I think it’s usually bad for consumers to be pushed towards more expensive phones. There are low-cost phones on the market today that are surprisingly high-quality. The Motorola G7 Power is an excellent phone. It even qualifies as a nearly universal unlocked phone. Without any sort of subsidy or promotion, it’s still only about $250 from Motorola, the phone’s manufacturer. It’s also possible to save big by ignoring recently-released devices and purchasing phone models that have been out for a few years.

Revisit options occasionally

Carriers’ plan options and prices change regularly. I suggest revisiting the options available a few times a year to be sure you’re not paying more than necessary. If you’ve taken my other advice of avoiding installment plans and buying universally unlocked phones, it will be easy to switch to a new carrier if you decide to do so.


I have financial relationships with a number of wireless carriers, including several mentioned in this article. Additional details about these relationships can be viewed here.

Footnotes

  1. Dividing technologies into generations is crude. Within a single generation, there may be multiple technologies with different levels of performance. For example, initial 3G technology was not as good as some of the 3G technology that was available years later.
  2. Interestingly, LTE isn’t technically, or at least wasn’t originally, a 4G technology. The Wikipedia article on LTE goes into more detail.
  3. As of 9/9/2019, the version of the phone listed on Motorola’s website includes CDMA support and support for some LTE bands that the AT&T version appears to lack.
  4. For example, Altice Mobile limits data speeds to 128Kbps while roaming. The following excerpt came from Altice’s Broadband Disclosure Information page on 9/6/2019:
    “While an Altice customer’s mobile device is connected to another provider’s mobile network (“off-network” or “domestic roaming”) speeds will be up to 2G.”
  5. For example, in many roaming areas, T-Mobile caps most of its subscribers at 0.2GB of data use. The following excerpt came from a web page about T-Mobile’s domestic roaming policies on 9/12/2019:
    “If you have one of our more recent plans activated on or after November 15, 2015 and are roaming on one of our standard network partners, you will have 200 MB of domestic roaming data per billing cycle. Once you hit 200 MB of data usage, data will be unavailable until you return to a T-Mobile coverage area, begin roaming in another area covered by one of our preferred network partners, or your next payment / bill cycle.”
  6. For example, the Sprint-based MVNO Twigby offers voice and text roaming on Verizon’s network but does not offer data roaming. The following excerpt came from Twigby’s coverage page on 9/12/2019:
    “Twigby’s wireless network services are primarily provided on the Nationwide Sprint® Network* for talk, text and data reaching more than 282 million people. However, if a Twigby customer is ever outside of the Nationwide Sprint® Network, the Verizon® voice network can be used for talk and text at no additional charge.”
  7. Sprint has prepaid customers, but it doesn’t seem to be offering prepaid service to new customers at this time. Sprint’s prepaid brands, Boost and Virgin, still offer prepaid service to new customers.
  8. The MVNO Ting, for example, has a pay-for-what-you-use model. Subscribers pay an amount at the end of each billing period that’s based on their level of use during the period.
  9. Starting with different criteria would change how the best plans came out relative to one another in terms of price. I realize there’s a risk of cherry picking criteria to fit an argument. I think the criteria I’ve picked are reasonable, but I realize different criteria could lead to different results.
  10. These plans are the best deals I could find that met my criteria as of 9/12/2019. The plans considered:

    • T-Mobile’s postpaid Essentials plan (unlimited data)
    • T-Mobile’s Simply Prepaid plan (10GB data per line)
    • Mint Mobile’s 8GB per line plan

    None of the price figures include taxes/fees. The prices of the plans offered directly by T-Mobile include discounts for automatic payment. The plan offered by Mint Mobile requires multiple months of service to be purchased at once.

  11. These plans are the best deals I was aware of that met my criteria as of 9/12/2019. The three plans considered:

    • Verizon’s postpaid plan with 8GB of shared data
    • Two lines on Verizon’s prepaid 6GB per line plan
    • Total Wireless’s family plan with 30GB of shared data

    I believe all of the prices include a discount for automatic payments and do not include additional taxes/fees.

  12. (90-50)*12=480
  13. (110-57)*12=636
  14. While calls are affected by prioritization policies, calls are almost always high enough priority that they go through without trouble regardless of the plan a customer is on.
  15. I think this is surprisingly common. I expect over a million families in the U.S. pay more than $1,000 extra per year for mismatched plans.