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Why T-Mobile's new plans won't end contract madness

Evan Dashevsky | April 1, 2013
In a bid to escape from its basement slot among nationwide cellular carriers, T-Mobile has unveiled a radical new pricing system that departs from the contract plans mobile users have grown used to hating.

In a bid to escape from its basement slot among nationwide cellular carriers, T-Mobile has unveiled a radical new pricing system that departs from the contract plans mobile users have grown used to hating.

To be sure, the new plans are a welcome injection of out-of-the-boxitude that can only benefit consumers. Still, "different" doesn't always translate to "better." T-Mobile may have branded its new payment plan as the "Simple Choice," but users may be forced to take out a calculator and crunch some numbers to figure out if it's truly the right choice for them.

Digging into the details

Mobile consumers have shown a willingness to spend up to $200 as a subsidized rate to get the hottest, newest, shiniest toy in their pocket on top of $100 per month in monthly coverage charges. Aside from tech journalists, though, most users probably don't spend too much time ruminating on how the major carriers subsidize the cost of these bleeding-edge gadgets so as make their money back over the life of the two-year, locked-in contract. That's just the way it was when dealing with the major carriers in the smartphone era. Until now.

On Tuesday, T-Mobile announced its plan to offer phones without subsidies attached to no-commitment contracts that begin at only $50/month for one phone. Sounds reasonable so far. We all hate tying ourselves to one provider for the next two years, right?

T-Mobile's plans offer unlimited talk, text, and data--and even mobile hotspot ability. The catch is you're limited to 500MB of data on T-Mobile's newly unleashed 4G LTE plan. Hit that ceiling, and you're kicked down to the company's slower data infrastructure. Consumers have the option of buying additional 4G access up to 2GB for an additional $10 per month, or truly unlimited 4G access for an additional $20 per month.

My colleague Jared Newman crunched the numbers and found that, depending on what plans you use and your digital habits, the cheaper answer is not always clear cut. For example, you could find a cheaper option over the course of two years if you compare the Samsung Galaxy S III on AT&T's least expensive plan versus buying the full cost of the phone from T-Mobile and signing up with its unlimited plan. However, he also found instances where you would pay up to $600 more for the same phone on comparable plans on Verizon over the course of a two-year contract.

In the latter example, T-Mobile may be the way to go. However, if you are an AT&T user who, like me, spends much of their time in Wi-Fi range, and hardly ever texts, then the limited AT&T plan may still prove to be your best option.

 

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