T-Mobile plans: By the numbers

T-Mobile announced its new plans March 26 at a news conference in New York. Bridget Carey, Senior Editor at CNET.com, discusses T-Mobile's decision to scrap two-year contracts for selling the iPhone on an installment plan while charging a monthly fee for unlimited calling, text and data.
March 27, 2013

T-Mobile is taking a new approach to wireless billing by charging separately for devices and data and doing away with the traditional two-year contract. In a major media event Tuesday, T-Mobile chief executive John Legere said that the new T-Mobile plans could save consumers a whole lot of money compared to other carrier plans. But how does that claim match up?

It can be a little difficult to do an apples-to-apples comparison — features such as hotspot capabilities or unlimited talk and text differ from carrier to carrier — but T-Mobile’s math does work out in some cases.

Price-comparison site WhistleOut ran its own numbers, and found that T-Mobile’s plans were consistently cheaper than Sprint, Verizon and AT&T for light, medium and heavy smartphone usage, comparing low, mid-tier and premium plans from each carrier. The site also found, however, that T-Mobile was often still more expensive than smaller, often pre-paid carriers such as Cricket, Virgin Mobile and Boost — or even the company with which T-Mobile wants to merge, MetroPCS.

For comparison’s sake, let’s look at the middle-of-the-road plans for all the carriers.

Say you’re a smartphone user looking at the new T-Mobile iPhone 5. The carrier is offering that phone for a down payment of about $100 and a two-year installment plan of $20 per month. All the T-Mobile plans come with unlimited talk and text; for a 2.5 GB data plan with those features, it will cost $60 per month. The main perk of the T-Mobile plan is that users’ phone bills go down after they pay for the device, and that there’s no two-year service contract — meaning you can upgrade your phone more easily and leave T-Mobile’s service even if you’re still paying off your phone.

John Legere, chief executive officer of T-Mobile USA, talks about the company’s plan to start selling Apple’s iPhone 5 and T-Mobile’s service plans. (Source: Bloomberg) (Bloomberg)

Total cost: Over two years, you’re paying $80 per month plus the original $100 down payment, coming to a total of $2,020.

On Verizon, a 2GB data plan costs $60 per month — but also has a $40 per month access fee for smartphones. That plan comes with unlimited talk and text as well, and the phone itself will cost you $200. Going with Verizon also gets you what’s currently the nation’s most extensive and stable 4G LTE network — a serious consideration for smartphone users.

Total cost: With a monthly $100 bill plus the iPhone cost, that comes out to about $2,600 for one phone; adding additional devices costs $40 per month for smartphones and $10 per month for tablets. Verizon, it should be noted, also has a $35 activation fee, which it waives in certain circumstances.

AT&T’s pricing is similar, though it’s hard to find a good plan to compare against T-Mobile’s 2.5 GB, unlimited text and talk offering. For an individual plan with unlimited minutes ($70 per month) , messaging ($20 per month) and 3GB of data ($30 per month), AT&T’s monthly bill rings up to $120 per month; an unlimited talk and text 4GB mobile share plan costs $110 per month. AT&T’s 4G LTE isn’t as comprehensive as Verizon’s, but AT&T does offer 4G speeds even in places where it has yet to deploy LTE.

Total cost: With the iPhone at $200, that brings AT&T’s range between $2,840 and $3,080. AT&T also charges a $36 activation fee, which it sometimes waives in promotions.

Finally, Sprint offers unlimited data plans with either unlimited talk, 900 minutes or 450 minutes, though these plans don’t include hotspot tethering — the ability to use your phone as a WiFi point. Sprint’s network, right now, is a weak spot for the company and makes the promise of unlimited data a little less appealing. That said, not worrying about overage charges or throttling has its advantages as well.

Total cost: Again, because Sprint chooses to differentiate its options based on talk time rather than data use, it’s little hard to run a direct comparison to T-Mobile’s 2.5 GB unlimited talk and text plan. If we looked at the middle-of-the-road Sprint plan with 900 minutes and unlimited data, it would shake out to $100 per month plus the $200 iPhone for about $2,600 over two years. With 2GB of hotspot capability at a cost of $19.99 per month, that total rises to $3,080.

Related stories:

Can T-Mobile’s gamble pay off?

T-Mobile says it’s leaving ‘the carrier club’ with new pricing structure

T-Mobile to sell iPhones on April 12, had been only major US carrier without popular device

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Hayley Tsukayama covers consumer technology for The Washington Post.
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