How to save $500 a year on your mobile plan

Over the past year Australians have bit whacked with a seemingly endless stream of price rises across almost every part of life. Whether it's petrol, food and energy costs or rent and mortgage payments, very little has been spared from the impact of inflation.

Included on that list is the price of mobile plans. In January, Vodafone cited inflation and higher business costs as part of the reason behind a move to bump up prices, including its cheapest available postpaid plan which rose from $40 to $45 per month.

That followed competitors Telstra and Optus which made hikes of their own last year. Telstra passed on increases of up to $4 per month in July which included a lift in its cheapest postpaid plan from $55 to $58 per month, while some existing Optus customers saw their plans rise by $4 per month in August.

Given that the three major telcos account for around 80% of the market share it's safe to say that plenty of mobile users will have seen their bills rise. However, not all providers have been hiking prices.

"While it's mainly been the big players that have explicitly been putting up their prices in response to inflation, there are still pretty good deals to be found at the lower end of the market which is the really price sensitive area," says telco expert and managing editor of WhistleOut, Alex Choros.

So could a plan from a smaller provider be worth considering for those looking to reduce their mobile costs? And aside from pricing, are there any other factors to weigh up? Let's take a look.

How much are the cheapest mobile plans?

A mobile plan may be a relatively small expense compared to other costs like mortgage or rent payments, but Genevieve Brock, the head of marketing at mobile provider Circles Life, believes that it's an expense Australians should still be looking at given the potential scope to save.

"With mobile plans, historically, people have been paying more than they need to. We did some research recently and found that people are paying $63 each month for a mobile plan on average. That's quite a bit of money, and if you're only using five or 10 gigs of data you can get a plan for a lot less."

For Choros, shopping around the smaller players on the market is a no-brainer when it comes to looking for more value for money.

"Considering the smaller providers is a really easy option for most Australians who are looking for a better deal, especially if you already own your phone. It's really worth taking a look at options that aren't just Telstra, Optus and Vodaphone.

"At the very bottom of the pricing spectrum you see reasonable options around $10 per month, although these are often due to promotional pricing where you'll save on, say, your first six months and then pay a full price after. Right now, TPG has an offer in the market where you can get a 12GB plan for $10 per month for the first six months and then it goes up to $20 per month after.

"The good thing is a lot of these plans tend to be contract-free. By and large most mobile plans are contract-free these days, so if you sign up for one of these promotional offers, you can always just swap after the first six months when the discount runs out."

The data decision

While the very cheapest offers on the market tend to come with 10GB (gigabytes) of data or less, Choros says that there are a growing number of providers offering value mobile plans for high-usage users with larger data appetites.

"I think data allowances in the cheaper plan space have gotten pretty generous these days, so you can easily get a 20GB plan for between $20-$25 per month. That's definitely going to suit a high percentage of the population, and if you need more data, $30-$40 plans now include as much as 50GB which will easily cover all but the heaviest users."

So for anyone on the hunt for a mobile plan with a decent amount of data, is there much of a difference between telcos when it comes to price?

Here's a comparison showcasing some of the cheapest plans available in the WhistleOut database against similar deals offered by the major telcos. It's based on a mobile user looking for a SIM-only, no-contract plan with a data allowance of at least 30GB.

Before rushing to a plan with a huge data allowance, Brock recommends that mobile users take a realistic look at the data they actually use and find a plan to suit.

"I would encourage people to go into the app of whatever provider they're with and have a look at the data they're using each month. Australians tend to be quite consistent in the amount of data they use, so you only need to look back at the last month or two. I think most people would be really surprised at what a small amount of data they actually use."

How does network coverage work with smaller providers?

A plan offering a generous data allowance for a low price could be great, but it won't be much good if you're not getting any reception, so choosing a provider with the right network coverage for your location is a must - especially for Australians living in rural and remote areas.

As Choros explains, while there are only three network operators in Australia (Optus, Telstra and Vodafone), the smaller mobile providers have deals in place to utilise those networks.

"By and large cheaper providers have identical coverage to their parent network. So Kogan has the same 4G footprint as Vodafone and Amaysim has the same 4G footprint as the Optus network. But cheaper plans don't always include 5G connectivity - that's still pretty rare at a lower price point.

"It is a slightly different situation on the Telstra network because the full Telstra network reaches 99.5% of the population, but its wholesale network reaches 98.8% the population.

"So there are some remote and rural areas that just have a much smaller footprint or no footprint at all on a Telstra provider like Belong when compared to the full Telstra network. Boost Mobile is the one exception to this - it's the only small provider that has access to the entire Telstra network."

The drawbacks 

As with any financial product, the cheapest mobile plans and providers won't always offer the same range of features and benefits as other options. If cost is your major motivator then that might not be an issue, but as Choros notes, the differences are worth weighing up.

"A lot of the time cheaper plans are a no-frills option. You're getting talk, text and data. In some cases you'll get international calls, but that's not always a given, and roaming offers are very rarely any good with cheap providers because a lot of the time they only offer pay-as-you-go roaming which can end up leading to bill shock.

"And you really miss out on some of the perks from larger providers. Telstra, for example, has a perks program where you can earn points which can be redeemed for discounts on devices, and it still has its cheap movie tickets partnership with Event Cinemas."

Making the switch

Whether you're about to make the move to a new plan or you're happy with your current deal, Choros says that it's worth regularly comparing offers to ensure that your plan is still competitive.

"If you have the patience for it changing providers every six months and shopping around to get the best deal is a really effective way of keeping your phone bill as low as possible.

"Even if you're not the kind of person who wants to change providers every six months, it's worth doing a stocktake once a year because even though we have seen phone plans get more expensive at the high end, there still is a lot of competition among the smaller names which means you can get a better deal.

"It's always important to remember - but not everyone realises this - that you can always keep your phone number when swapping providers. Your right to your phone number is protected by law, so changing plan doesn't mean giving up your number."

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