"Prepaid cellular service is a type of service plan where you pay the cellular company in advance for access to its network. Unlike "postpaid" subscription plans, which often include a contract for service over a set period of months or years, prepaid plans don't tie you down. You pay in advance every month, and you're free to leave at any time."
"You might be surprised to learn that prepaid cellular services almost universally use the same networks as the major companies, such as Verizon, AT&T, and T-Mobile. Many prepaid services are even owned by those same companies. That's possible because the infrastructure built to provide cellular service often delivers way more network capacity than what's needed at any particular point in time. Instead of leaving the network unused, the companies that build cellular networks rent out the excess."
Prepaid cellular service requires paying the carrier in advance for network access and does not involve long-term contracts. Payments are made monthly in advance and subscribers may cancel anytime without penalties. Prepaid plans often cost less overall and offer flexible data options ranging from a few gigabytes to unlimited plans. Postpaid subscription plans often provide upfront phone discounts and heavy marketing but can be difficult to exit. Most prepaid services use the same infrastructure as major networks because carriers rent excess capacity to other companies. Companies that rent capacity are called mobile virtual network operators (MVNOs), and many MVNOs are owned by network operators.
Read at WIRED
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