How to Minimize Your Monthly Cell Phone Bill with a Smartphone and a Data Plan

The Internet has significantly changed the way we communicate. Many people have already eliminated their monthly home phone by using Voice over IP (VoIP). Similarly, the business case for Enterprise VoIP is compelling. It eliminates separate voice and data services and the associated cost of maintenance.

How much do voice plans cost?

Mobility carriers offer to sell you a cell phone voice plan with 150-200 minutes for $30-35/month. Additional minutes are often charged at 30-40 cents/minute. This means you're spending about 20-30 cents/minute if you use all the minutes precisely. The monthly amount is fixed, whether you use all the minutes or not.

Minimizing mobile voice cost

A prepaid plan can help you minimize mobile voice cost, which often costs 20-25 cents/minute in a pay-as-you-go setup. You only get charged for the calls you make or receive. Examples of prepaid carriers are 7-Eleven Speakout wireless, President's Choice Mobile, Petro-Canada Mobile, Telus Prepaid and Virgin Mobile. The big wireless companies also usually have a prepaid option as well, but they are typically more costly overall.

How to choose a mobile data plan?

Unfortunately, mobile data packages in Canada cost significantly more than in most other developed and undeveloped nations. For example, Canadian carriers typically charge $30/month for 1GB of data (Rogers), $20/month for 250MB of data (Telus prepaid), and Koodo offers an interesting tiered data plan that charges based on what you use. Note that "unlimited browsing plans" advertised by Speakout and others are intended for browsing only and do not officially support full internet data required by VoIP.

This places data costs at roughly 5-10 cents/MB.

How much does VoIP cost over mobile (3G) data?

The following table summarizes the common VoIP codecs supported by VoIP service providers. For each one, we list the approximate nominal bandwidth in MB/min in a two-way VoIP connection, and the associated cost per minute on a typical data plan:

Clearly, the cost of VoIP is much lower than traditional voice plans. For obvious reasons, this is one of the best kept secrets in the cell phone business. Mobile carriers in Canada often lock subscribers into three-year plans with mandatory voice plans to maximize profit.

If you have a Smartphone with a data plan, you can minimize your cell phone monthly bill by maximizing VoIP. That is, use low-cost VoIP as much as possible and only use prepaid minutes as backup.

How to choose a VoIP provider?

There are many VoIP providers to choose from, from Skype and Vonage to Voip.ms and Freephoneline.ca. SavingMentor has written an excellent guide to VoIP services.

How do I maximize VoIP usage?

Theoretically, you can save the most by going 100% VoIP. For example, some people have figured out how to use cheap tablet/iPad data only plans ($15-20 for 250-500MB) on regular iPhones and Android cell phones. You can also forego mobile data plans altogether and use wifi exclusively to make your calls.

In practice, however, this does not always give you a reliable voice connection because VoIP requires a good signal with sufficient bandwidth and latency for a high quality voice call. High quality mobile data and wifi are not available everywhere.

Therefore we suggest the following method to help you save money by maximizing VoIP while maintaining the reliability of cellular voice. The principal goals of the following method are:

• Minimize cost: maximize VoIP usage over cell voice
• Reliability: call routes to cellular voice if VoIP is not available
• Easy to use: callers only need to call a single number
• Portability: your number is fixed even if you change mobile carriers

How do I set it up?

Setting up a VoIP provider for your smartphone is almost the same as setting one up for your home. Here are the steps:

1)  Choose a VoIP service provider that offers a local DID (direct inward dial, telco speak for a phone number). For this method, choose one that offers normal routing to a VoIP client, with the ability to failover to another phone number. Service providers like Voip.ms and Callcentric provide this feature.

2)  Order a phone number (DID). This costs about $1-2 per month at the likes of Voip.ms or Vbuzzer. Incoming minutes are either included or cost up to 1 cent per minute. Outgoing rates range from sub-cent for local to a few cents per minute for international calls.

3)  Configure the DID to ring your VoIP client X number of times, say 2-3 times, with failover to your cell number. This is an important step to ensure that if you're not registered with the service provider your call will still be routed to your regular cell phone number. Your phone may not be registered if you're in an area that does not have mobile data connection, or if you're using wifi behind a strict firewall at work. In these cases, the service provider will route your call to your regular cell number, meaning your cell minutes will only be used if VoIP is not an option.

4)  Finally, use a VoIP client to register with the VoIP service provider you signed up with on your smartphone. The following table lists some of the VoIP clients we have tested.

* On Android 2.3, SIP (Internet Calling) is supported natively but is restricted to work over WiFi only. This restriction has been removed in many custom ROMs like Cyanogenmod.

Making Calls

Whenever you make a call, use the VoIP line as much as possible. Apps like Csipsimple have an interface that is integrated with your phone's native dialer so it is easy to choose VoIP vs. cellular voice when placing a call. It can also make the appropriate selection automatically depending on whether there is a data connection available.

Receiving Calls

Now, when anyone calls your VoIP DID, it will try to use VoIP first. If VoIP is not available, it will ring your mobile number as backup. This way you can maximize calls on VOIP to minimize cost, and still have cell backup.

Additional Tips

• If you change your mobile carrier and mobile number, just update the failover number on the VoIP account so it will failover to the new phone number
• If you already have a VoIP service provider for your home, you may consider using the same one so you can set up advanced options like Ring Groups for your home number to ring your smartphone while you're out, IVR/Reception features, and more.

Other Options

There are a number of other options when it comes to saving phone costs with a data plan. Here are a couple of examples:

• On an iPhone/iPod/iPad, use the free app Talkatone to make free calls in North America using Google Talk. This is similar to the phone feature now available in Gmail on your computer.
• Use a call back service, such as Google Voice, if you have unlimited incoming minutes for your cell phone. Note that Google Voice is not officially available to most Canadians yet and is only available to those who have been previously grandfathered in or to those with a 403 area code.

This is a guest post written by Lee, a regular reader of HowToSaveMoney.ca, who graciously accepted my invitation to write a post on this subject that he is very knowledgeable about. If you are a veteran at saving money and would like the opportunity to write an article and have it published, please contact me and express your interest.