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3/26/2013
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T-Mobile's iPhone 5 By The Numbers

T-Mobile will at long last offer the Apple iPhone, but does the carrier's new math add up?

Apple iPhone 5S: The Hot Rumors
Apple iPhone 5S: The Hot Rumors
(click image for slideshow)
With much fanfare and hullaballoo, T-Mobile USA CEO John Legere announced that the company will finally offer Apple's smartphone. The iPhone 5 goes on sale from T-Mobile April 12, but customers can sign up starting April 5. T-Mobile is advertising the iPhone 5 for $99, but that's not necessarily what you'll pay.

The $99 is actually a down payment on the iPhone 5. Thereafter, T-Mobile's iPhone 5 customers will make monthly payments of $20 for 24 months until the device is paid off. Between the down payment and the monthly installments, the total amounts to $580 -- that's about $70 less than the iPhone 5's raw $649 selling price.

As soon as the iPhone 5 is paid off, you'll own the device, whether or not you stick with T-Mobile USA. Even better, once you own the device, T-Mobile USA will unlock it so it can be used on competing networks. (Yes, new phones will be locked to T-Mobile's network.)

The beauty of T-Mobile's new model is that there are no contracts. Customers can leave at any time. Legere even said, "If we suck for a month, leave! Go somewhere else!" Of course, he also said T-Mobile hopes that customers will love its new service enough that they will stay.

[ For more on T-Mobile's bold new plans, see T-Mobile Looks To Shake Up Industry. ]

Asked what happens if a customer leaves T-Mobile after having made only a few payments, T-Mobile didn't really have a good answer. Instead, Legere said the payoff amount will be based on what's left of the remaining payments and the fair market value for the iPhone 5 (if the customer wants to turn the device in). T-Mobile's wishy-washy answer is somewhat concerning.

There are no penalties, said T-Mobile, for accelerating payments or paying off the device in full instead of making the $20 monthly payments. T-Mobile claimed it is offering this financing option with no interest. In fact, its $580 total price actually saves consumers money compared to buying the phone outright from Apple.

Beyond the down payment and the monthly $20 fee, customers will of course need a service plan for their iPhone 5. The cheapest plan costs $50 per month and includes unlimited voice, unlimited messaging and 500MB of data. Want more data? Pay more.

That means an iPhone 5 and T-Mobile's cheapest plan amount to $70 per month together. Is that a good deal? It really depends on how you think about it.

For starters, T-Mobile's iPhone 5 is (thankfully) optimized for its network. That means you'll get LTE 4G support in the 1700MHz band, as well as HSPA+ 3G in the 1700 and 1900MHz bands. T-Mobile's iPhone will be the only one that offers HD Voice (higher-quality phone calls). Beyond these customizations, T-Mobile's iPhone 5 is the same as every other iPhone 5. The other carriers charge from $199 to $399 for the iPhone 5, depending on storage, at contract inception.

The key benefit for T-Mobile customers here is the lack of a contract. Unhappy T-Mo customers can walk away at any time. That's a powerful motivator for T-Mobile, which needs to earn its customers' business each and every day. Other carriers lock customers into two-year contracts, which prevents them from leaving. The no-contract option is certainly appealing. Whether or not T-Mobile's services can live up to the demands from iPhone 5 customers is another matter entirely.

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PJS880
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PJS880,
User Rank: Apprentice
4/8/2013 | 10:51:07 AM
re: T-Mobile's iPhone 5 By The Numbers
Awesome! I like how they allow you to finance the phone and the cost turns out running cheaper. Sounds like T-Mobile has some kinks to work put but non-the less a positive step forward for the mobile carrier. Offering customers all mobile devices that are current combined with the truly 4G network, I think that this is one of the best mobile carriers on the market today. I also believe that T-Mobile has the right idea with no contracts, I was literally paying 117% more for the same services through another mobile carrierGǪ.go T-Mobile go!

Paul Sprague
InformationWeek Contributor
Steven W
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Steven W,
User Rank: Apprentice
3/27/2013 | 4:14:01 PM
re: T-Mobile's iPhone 5 By The Numbers
Prepare to be rejected if your credit score is not A+, you can't reasonably complete a credit application, your annual income is too low, or you have a bankruptcy or foreclosure in your credit history. No, you will not make three payments and vanish into the forest. This will be much like a car note. That means repossessions are possible. A new reality show, where this big man shows you a repossession order, and then demands your handset? Call me insightful :). Since it's locked to T-Mobile and it's now illegal to unlock without the carriers permission, there will be a poster child who actually gets fined, sued, or even criminally charged for unlocking the device (and they will snitch on the cell phone shop that did the unlocking) . It's not actually your phone until it's paid off and T-mobile releases the ESN code, or network lock.
Let's see whose made an example of first?
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