Why T-Mobile USA’s Apple iPhone 5 isn’t a good deal

“T-Mobile has officially announced its iPhone, which will cost $99 up front and then another $20 per month over the next 25 months, which brings the cost of a phone slightly lower than Apple’s iPhone list price of $650, at $580,” Rebecca Greenfield reports for The Atlantic Wire. “Even so, with two years worth of T-Mobile’s contract, it still comes out slightly more expensive than a similar AT&T plan.”

“But that’s not why the T-Mobile unsubsidized phones are not that good a deal,” Greenfield reports. “The bigger problem is that T-Mobile is not offering the cheapest 24 months of iPhone service on the market.”

Greenfield reports, “If you buy a $200 subsidized iPhone 5 at AT&T with a monthly plan for 2GB of data and 450 minutes, the all-in cost over two years is $1,916… [T-Mobile costs] $2,020. So T-Mobile isn’t saving you money, it’s just changing when you pay them. It’s an accounting change more than a value play.”

Read more in the full article here.

MacDailyNews Take: Yeah, but you don’t get HD Voice and 7 whole cites with LTE coverage vs. 485 with Verizon Wireless.

Related article:
T-Mobile USA begins selling Apple iPhone 5 on April 12th for $99 down, iPhone 4S for $69.99, iPhone 4 for $14.99 – March 26, 2013

44 Comments

  1. um, let’s see the math for a 3-yr hold period or 4-yr hold period–or, better, what is the break-even period; some of us don’t need a new device every two years

    1. And there is also trade-in value and the third-party market.

      In other words, after a certain number of months I could sell my phone and collect what’s value is third-party and maybe upgrade sooner than two years. Or, I could be the guy who goes out and buys and used iPhone 5 for one of my kids and then puts it on T-Mobile’s network (or does it matter who you bought it from?)

    2. Exactly.
      That is why I have more money in the bank than most. Keep the phone for 4 or 5 years. Buy last year’s model, use it till it it is useless.

      Cell phones remind me of cars and leasing. Too many stupid people that think of the monthly payment as always being there and should never go away.
      Buy a car, pay it off and then bank the extra money for another 2-4 years.

      Too many people that must have the latest and greatest. Then they wonder why they go broke later in life.

      1. I agree with you to a certain extent. The only problem with it is that I have no idea how many days I left on this earth (anything can happen) so I strive to strike a balance between pinching pennies and spending like a fool.

        When it comes to technology, I’m easily parted from my money (but I also enjoy it very much and you only live once.)

        1. So your life philosophy is that on your death bed you can reflect back on your life and have the satisfaction that you never owned an electronic device longer than a year or two.

      2. I agree. That is what I did with my last phone. Now I have a 1 year old 4S which should keep me good for another 3 to 4 years. At this time next year I will be looking at T-Mobiles rates if AT&T does not give me a great rate to renew with my curren tphone

  2. Everyone is missing the point. When the two years are up, my bill goes down. On AT&T is doesn’t. Of course, some will argue that you would want to get a new phone anyway, but that’s not the point. After 25 months, your monthly commitment goes down. Also, if you want to leave before the 25 months are up, just pay out the phone and move on.

    1. That’s true. The shady business of subsidizing phones is taking another hit. And for that reason alone I think this is good.
      But seriously, just buy the phone outright, get some cash-back points or whatever on you credit card and move on.

  3. Nothing is free.

    The difference is in how it’s presented to the buyer. I wish that all of these companies would stop doing the subsidy and just sell the phones for either full retail price (or even compete on price). Then, if they want to do what your local electronics stores do (24 months interest free financing!) then fine.

    Would be nice to just go whatever electronics store I want (or to Apple directly) and pay for phone upfront or finance it. Then go to whichever cellular carrier has the best:
    • Deal
    • Reception
    • Etc.

    That’s how it SHOULD work.

  4. Yeah, the savings aren’t that great for just one phone. But if you have a family plan with 3+ phones you can save quite a bit with T-Mobile’s new pricing. After 2 phones each additional phone starts at $10/month.

    But, that doesn’t help me until T-Mobile has HSPA+ at 1900 MHz and/or LTE in my area. Right now T-Mobile’s network only supports Edge on the iPhone where I live.

    As soon as T-Mobile offers some real data speeds in my area, I could see myself dropping AT&T like an ugly baby.

  5. I am always thrilled when I see the US costs for a plan. Double and triple as much as in Germany. What do all the telcos do with all your money, guys? Do they buy islands in the sun for their CEOs?

    Really strange to see that something is so much more expensive in the US, usually we in Europe pay more. If anybody can explain it would be very welcome. Thanks in advance.

    1. It’s called the Free Enterprise Tax. In Europe taxes are imposed by governments made up of representatives of the people and the taxes go toward the benefit of the nation as a whole. In America, we oppose government taxation. Instead, we let unfettered corporate interests rip the nation off and give the money to the benefit of the 1%. Telecommunications, internet access, health care, energy, the story is pretty much the same across the board.

          1. At least I’m proud to be an American. As opposed to you, ashamed to be a North American. What was the name of that Canadian automobile manufacturer again? Why don’t you move to Europe too. You’d be much happier. And certainly not missed. Eh?

        1. No, just going to continue to work on unscrewing my fellow Americans. Maybe they’ll be able to stop running around shooting each other if we straighten out the functionality of the country and the government.

    2. By far, the best explanation I’ve heard was given by Benedict Evans on Horace Dediu’s Podcast: http://5by5.tv/criticalpath/64

      The topic starts at 25:40 or cut to the chase at 28:50. You should just listen to the whole episode (and every other episode of the show).

      Basically, it involves the legacy long distance industry, the large geographic area of the US, and the FCC making the wrong decisions. But, the podcast explains it better than I can.

  6. I agree that the way telecom is marketed is a weird arrangement. An analogy would be if Oil companies sold cars to you at a discount with a contract that you can only buy their gas for 2 years and you have to choose how much you will drive at the time of purchase.

    Its an odd arrangement tying the hardware and service together in a contract.

    But maybe the oil companies are the ones missing an opportunity if they could make your car run on only their gas!

  7. If you want to upgrade frequently it is cheaper to go T-Mobile. AT&T will charge you an extra $250 on top of that $200 that the author is quoting for a new iPhone if you want to upgrade your device to the latest model every year. And on the flip side, you could sell your used/unlocked T-Mobile iPhone every year and cover most of the cost of the newly released model and definitely come out ahead in the long run.

  8. That is why Apple should spend their cash for T-Mobile and give unlimited everything for $50 a month with 2 year commitment/contract. It would sell ten trillion iPhones and Apple devices and kick the middlemen carriers in the teeth. No more paying for extra texts and overages, just plain internet and voip on your Apple device, including Facetime on Appe TV and all devices. One flat rate fee per month for all…would simplify and change everything! I would also buy one of the middlemen DISH/DirectTV, and use their already up satellites to deliver content. Media makers would beg to have their content on Apple Satellites. Cut out the middlemen and change the world and their subscription control. No middlemen!

  9. The big difference is:
    For T-Mobile, there’s no pressure to upgrade your iPhone, you won’t lose anything after you paid off your iPhone.
    But for others, after the 2 years contract, if you don’t upgrade, you’re giving free subsidy money to them.
    T-mobile PR isn’t making this clear enough IMHO, rather they are doing this ‘un-carrier’ thing. Maybe they are targeting bigger goal here.
    http://linwangge.wordpress.com/2013/03/26/t-mobiles-recent-un-carrier-move-pretty-pr-to-cover-cheap-prepaid-label/

  10. Was expecting a better deal from T-Mobile! Cheaper text plan might be the difference, cuz no way in hell I’m paying AT&T’s exorbitant prices when I can do it for free with TextNow app. Once the media points out T-Mobile’s slight-of-hand pricing game, they’ll lose credibility. Even so, adding the iPhone is huge!

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