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In this video tutorial, Alex Kidman from Finder.com.au explains the difference between prepaid and contract mobile phone plans. Both require a contract and identification, but the key difference is in the payment method. Prepaid plans have a data quota that, once used, requires purchasing additional data, while contract plans allow for excess usage at a cost of $10 per gigabyte. Prepaid plans offer more control over mobile spending, while contract plans provide flexibility for those who may need extra data.