It means you have to choose a Verizon prepaid plan during set up for the phone to work. So yes it is extra on top of the phone unless you already have a Verizon prepaid account. Your choices are $30 for unlimited talk,text,and pictures with wifi only data plan. $45 for unlimited talk,txt etc with 2g of data plus always on data when you use up the 2 g high speed. Or they have $60 plan that has all of the above with 5g high speed data.