There are two commonly held assumptions about cell phone service in Mexico: 1) it’s expensive and 2) pay-as-you-go plans are more expensive than annual contracts, thus causing the poor (who don’t have credit cards for yearly contracts) to pay more.

On the surface, these claims seem to be true. Just compare typical iPhone plans in the US and Mexico:

If you’re in the US you can buy an iPhone 5 for $200 with a one year-contract with Sprint and then pay $80 a month for 450 minutes per month, unlimited texting, and unlimited data:

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After the end of the year, you’ll have paid a total of $1,160.

Compare that to Telcel, Mexico’s largest cell phone provider. An iPhone 5 with a one-year contract with Telcel will cost you $600 (7,639 pesos). An equivalent plan will give you 420 minutes, 20 text messages, and 3 gigabytes of data for $73 per month (929 pesos).

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After the end of the year, you’ll have paid a total of $1,476. A minimum wage employee in Mexico would have to work 300 hours to afford a year of iPhone.

Not Free, but Freedom

It’s far cheaper — both in the United States and in Mexico — to purchase an unlocked iPhone directly from Apple for $650 and then purchase a prepaid Movistar SIM card for less than $10. (Or, if you’re based in the US, it’s cheaper to buy an unlocked iPhone and then purchase a free prepaid SIM T-mobile SIM card.)

At the end of the first year I will have paid $890. Plus I have an iPhone that is unlocked and not tied to any single carrier, which both increases its resale value and my freedom. At the end of two years I will have paid $1,130. A Sprint customer will have paid $2,120. A Telcel customer will have paid $2,350. This, of course, isn’t taking into account that the Sprint and Telcel customers have far fewer features than I, and are likely to pay heavy fees for extra calls and international roaming.

What follows are step by step instructions that explain how I spend less than $20 a month for:

  • 1 gigabyte of data per month (far more than I ever use)
  • Practically unlimited text messages (which I rarely use anyway thanks to Whatsapp, GroupMe, and iMessage)
  • Practically unlimited international calls to 40 different countries
  • A customized US phone number that automatically forwards to my Mexico cell phone. (I can also set it to forward to multiple other phone numbers.)

First, it’s crucial to download the $1 DataMan app for your iPhone to measure your data consumption and to receive notifications when you might go over, and when it’s time for you to refill your account.

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At least once a week Movistar sends out a text message to let you know that it’s “3×1 recharge day.” When I receive one of these messages during the final week of the month, I always recharge 200 pesos using Movistar’s online portal, which takes about two minutes. Having spent 200 pesos ($15.70), I know have 600 pesos of credit ($47.18). Immediately I activate the 1GB data package (it will soon include 4G for the iPhone 5), which lasts for 30 days and costs 199 pesos. I am now left with 400 pesos of credit for airtime.

Included in Movistar’s prepaid plan are three Movistar numbers to which you can make unlimited free calls of up to a duration of 5 minutes per call. At least half of my phone calls are to my girlfriend, and the vast majority of them are less than five minutes. We probably average about 200 minutes a month of calls for which we aren’t charged anything. Movistar charges one peso per minute for all other phone calls (regardless of whether they are land lines, cell phones, or even numbers based in the US or Canada). That means that, after the 200 minutes of free calls to my girlfriend, I am still left with 400 minutes of airtime to call anyone else, about the equivalent of the Telcel and Sprint plans that cost four times as much per month. Unused minutes roll over to the next month, and thanks to a sensible federal regulation, Movistar is no longer allowed to round up my usage to the nearest minute. I currently have 1000 minutes of airtime on my phone and I know I’ll never be able to use it up.

I pay Skype $60 a year ($5 a month) for a dedicated, customized US number that automatically forwards to my Mexico cell phone. I use Skype-To-Go to program the phone numbers of my friends and colleagues in the UK, Argentina, Chile, and Portugal as if they were local numbers here in Mexico City. I am charged only $0.02 per minute for phone calls to the following countries:

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An hour-long conversation to, say, a cell phone in Chile only cost me $1.20 and the quality is always crystal-clear. Best of all, I’m never charged international roaming fees. Every month there is a story in the media of some poor soul who was charged $1,000 (or $4,000!) for a week of cell phone use while visiting Mexico. It’s even worse if you’re traveling to Russia, New Zealand or Spain. I avoid these ridiculous roaming rates by merely buying a local SIM card wherever I go.

In the United States I spend $50 for a month of unlimited voice, data, and text messaging with T-mobile. (For an extra $10 I can add on unlimited calls to Mexico.) That’s far more expensive than what I spend in most countries. In Chile I spend about $15 for practically unlimited data and calls for a week. In Peru and Argentina I spend about $10 per week. When ever I travel I update my Skype call-forwarding so that my US number still reaches me wherever I am.

There you have it. That’s how I spend about $20 a month for nearly unlimited data, calls, texts, and international calls. Did I miss any tricks? Let me know.