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T-Mobile’s Contract Free Plan Compared to Other Carriers

At a press conference in New York on Tuesday, T-Mobile announced that it will finally start offering the iPhone and unveiled a new pricing plan.

The good news about the new pricing plan is that the company is eliminating that hated two-year contract that locks in customers even if they want to switch carriers. The bad news is that they will not be subsidizing the cost of phones as they had in the past and like AT&T, Sprint and Verizon so far still do.

That subsidy is how it’s possible for a carrier to give you a free phone or sell you an expensive smart phone like the iPhone for $199, even though the full retail price of that phone exceeds $600.  Of course, there is no such thing as a free phone so, to make up for the cost of the subsidy, carriers require that you sign a two-year contract with a hefty early termination fee for those who want an out.

With T-Mobile’s new plan, users pay the market price for their phones either up front or over a period of up to two years.

Customers who want the new T-Mobile iPhone will pay $580 for the phone (Apple charges $650 for an unlocked iPhone) and give customers the option of paying upfront or getting an interest free loan and paying $20 a month for 24 months.

Good deal

As it turns out the new pricing plan is also a good deal relative to the competition (scroll down for chart).   Before you add taxes and fees, a basic T-Mobile iPhone will cost $1,780 for a two-year period when you include the $100 down payment, the $20 monthly payment and the $50 service plan which includes unlimited talk and text plus 500 MB of data per month. That averages out to $74.17 a month. For $10 more you get 2 GB of data or $20 more a month buys you unlimited data. So, using that same average formula, the total cost of owning an iPhone with unlimited data for two years would average out to $94.17 a month.

AT&T and Verizon don’t have identical plans but — for comparison sake, an AT&T plan with unlimited talk and text and 300 MB comes $98.28 a month when you factor in the $199 cost of the phone.  AT&T 5 GB plan — the maximum amount of data you can buy — comes to $128.28 a month using the same formula.

Verizon charges $100 a month for unlimited calling and text and 2 GB of data, so factoring the cost of the phone, it comes to $108.29 a month. Verizon’s 4 GB plan comes to $118.29 a month and their most data intensive plan that includes 10 GB of data comes to $149.29 a month,

Sprint was the first major carrier to offer an unlimited data plan, which costs $109.99 month or $2,640 for two years.  Add in the $199 for the phone and your total cost is $2,839.

Other factors

Of course there are other factors including family plans, plans for people who don’t need texting or unlimited talk and — very important — the quality of service where you live and travel.  T-Mobile, for example, is just starting to roll out its 4G LTE network. AT&T and Verizon are way ahead on their LTE footprints and Sprint — which is still behind the two big guys — is even ahead of T-Mobile.

Here are some but not all plans. Prices do not include taxes and fees.

T-Mobile Monthly 2 Years Phone Cost Total Average per Month
500 MB Data 50 1200 580 $1,780.00 $74.17
2 GB Data 60 1440 580 $2,020.00 $84.17
Unlimited data 70 1680 580 $2,260.00 $94.17
Unlimited talk 300 MB Data 89.99 2159.76 199 $2,358.76 $98.28
3 GB Data 119.99 2879.76 199 $3,078.76 $128.28
5 GB Data 139.99 3359.76 199 $3,558.76 $148.28
Unlimited talk & text 2 GB data 100 2400 199 $2,599.00 $108.29
4 GB data 110 2640 199 $2,839.00 $118.29
6 GB data 120 2880 199 $3,079.00 $128.29
8 GB data 130 3120 199 $3,319.00 $138.29
10 GB data 140 3360 199 $3,559.00 $148.29
Unlimited everything 109.99 2639.76 199 $2,838.76 $118.28