By Jim Karpen on Fri, 04/05/2013
T-Mobile, the only one of the country's four largest carriers not yet offering the iPhone, has now begun taking preorders ahead of its April 12 launch. Unlike other carriers, T-Mobile has switched to a new model: customers pay the full cost of the iPhone rather than the subsidized price of $200, but their monthly cost for unlimited voice and data is much lower. Over time, you can save quite a lot of money.
T-Mobile also is offering payment plans. Instead of paying the $580 cost up front, you can make a $100 down payment and then pay the rest off at $20/month for the next 24 months. One of the appeals of this new approach is that you're not locking yourself into a two-year contract. If after a year you decide you want the latest and greatest, you can sell your iPhone on eBay, pay off the balance to T-Mobile, and buy the newest phone.
The carrier's monthly plan starts at $50 for unlimited voice, text, and web. But you're limited to 500MB of data via its fast 4G LTE network. After that, you still have unlimited data, but at 2G speeds. You can bump up that limit to 2.5GB for $60 per month. For $70 per month, you get unlimited nationwide 4G data. Of course, their 4G LTE coverage is still only in a small number of cities, so unless you're in one of those cities you'll not really have any reason to go for one of the more expensive plans. It's currently live in seven cities: Baltimore, Houston, Kansas City, Las Vegas, Phoenix, San Jose, and Washington D.C. The company expects to expand its LTE coverage to 100 million people by the middle of this year and 200 million by the year's end. If you're not in their LTE coverage area, you'll likely be using their HSPA+ network, which isn't as fast as 4G LTE but, being souped up 3G, is certainly way faster than 2G. What's not clear to me is whether with HSPA+ you will still have the 250MB limit. The wording on their site would suggest not, since it specifies 4G speeds as being limited.
Although T-Mobile hasn't yet offered the iPhone, it already has quite a large number of customers who use jailbroken, unlocked, and out-of-contract iPhones on its network. As of last November, T-Mobile reported that its customer base included 1.5 million iPhone users. The company has long resisted carrying the iPhone because it said it didn't want to pay the huge up-front cost. For other carriers, even though they give you a subsidized cost, they're paying the full cost to Apple up front. And obviously, they only gradually recoup that investment.
So usually when a new iPhone comes out and carriers sell millions, they end up reporting a quarterly loss because of the big hit to their bottom line. T-Mobile wanted to avoid that, and in fact it's moving all its phones to this new no-contract, no-subsidy approach.