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Update 27. Dec 2011 - upon arrival at the Phuket airport you will often find staff from TRUE (a real Thai mobile operator) literally handing out FREE GSM SIM (standard & micro size) cards along with instructions. Be sure and get one there is NO trick. You can add money to the account by buying a voucher at any 7-11 store (all over the place). The 7-11 staff were helpful in adding the credit to the phone.
International telephone calls are only 1.5 to 3.0 baht per minute (US $0.04 to $0.09) and local calls are only 1.5 baht. This is a great deal and very inexpensive.
You will get 10 meg of data for free just for adding any value (typical min is 50 baht ~ USD$1.50!). If you have smart phone, you can get 100 meg of data for USD$4 (you register for the service by sending an SMS message). The packet they give you with the SIM card has full instructions and pricing information.
3G data service is available on most parts of the island and 2G (EDGE) radio service is practically everywhere.
Also, there are many phone cards available and phone booths are in many places in towns. You have to dial a connection number to get international call ( 008, 007,,,,) before dialing your country number. They also charge about 24 Baht for an international call.
Best thing is go to an internet cafe and use net-to-phone or other internet facility to dial to your country.
Please note: That if you have an old local mobile phone number from before that you want to call to or have gotten a mobile telephone number from a printed or old source. You will need to add the number "8" after the first zero. So the second digit of all handphone numberswill be an "8" from now on. There are just so many handphones in Thailand it had to be done.