Is your iPhone order delayed? Count yourself lucky. You’re going to need every moment of that time to figure out the conflicting and sometimes incoherent pricing put forth by most of the major carriers.
How much is that iPhone in the window?
Say you want an iPhone 6 with 2 gigabytes of data, which is about right for average North American customers. Here are your total costs over two years for a single-line plan, counting phone pricing and service charges but not taxes or other incidental fees:
• AT&T’s Mobile Share plan will cost you $2,120. But its Next pricing will add up to $2,210.
* At Sprint,you’ll pay $2,120 over a standard two-year contract. Or $1,850 if you pick a plan that gives no discount on the phone. Or, get this, just $1,680 for the “iPhone for Life” deal. Add a $10/month surcharge for tethering (the ability to share a phone’s broadband with a laptop over WiFi), or another $240 over two years.
• T-Mobile is $1,730. Simple.
• Verizon Wireless will run $1,640 on a Single Line Smartphone contract, or maybe $1,850 with Edge pricing — or, with tethering, $2,360 or $2,570.
(Rob Pegoraro/Yahoo Tech)
If you think this math is crazy, it’s not just you; I’ve had to immerse myself in these details, and I’m still confused. But here are some cost-saving choices:
• If you don’t need tethering, get Verizon’s $60 Single Line Smartphone contract. That’s $1,640 for two years. Do not pay for the More Everything or Edge options.
• If tethering is a must but rural coverage is not, get T-Mobile’s $45 Simple Starter ($1,730 total).
• If you need both tethering and rural coverage, look at AT&T’s $80 Mobile Share option ($2,120 total).
• Sprint’s iPhone for Life $70 lease option has that low $1,680 total but comes without tethering and with weak coverage. Its other options yield a higher price, and you’ll still have the same issues.
The fake price slowly fades
Phone plans used to be simpler: All the major U.S. carriers subsidized the price of phones to cut your upfront costs, and then padded your monthly bills to recoup that subsidy.
We indulged in the consensual fiction that we were getting cheap phones — and ignored how keeping a phone past a two-year contract amounted to tipping that company an extra $20 or so every month.
(Rob Pegoraro/Yahoo Tech)
Then, in early 2013, T-Mobile hung up on that model, scrapping its built-in subsidies and pricing wireless service separately from hardware. To make up for the sting of having to pay $650 for a new iPhone, it gave customers interest-free installment-plan loans — so once the phone was paid off, the monthly bill would shrink accordingly.
People were still confused.
But AT&T, Verizon, and Sprint followed suit, sort of. They let shoppers choose between buying an unsubsidized handset for the full retail prices up front and paying less each month, or going with the standard two-year contract. Hello, twice the math!
And if you do the math, it doesn’t always add up. Their unsubsidized plans don’t offer discounts equal to every phone’s full cost: You can do well with an inexpensive Moto X, less so with an iPhone. These discounts further vary by your data allocation — it can be cheaper to pay for more data than you’d ever use.
With those three carriers having turned budgeting for phone expenses into a game of three-dimensional chess, you could understand how coverage of last year’s new iPhones fixated on subsidized prices even though they were fake numbers.
With this year’s iPhone 6 and iPhone 6 Plus, Apple tried to simplify matters by providing one interactive page to compare services.
Ignore it: It leaves out Verizon’s surprisingly affordable Single Line Smartphone plans and Sprint’s iPhone for Life leasing option and Easy Pay unsubsidized-phone option.
Why, Sprint, why?
After T-Mobile, AT&T does the least violence to logic. The standard subsidized plan gets you a lower device price and overall lower total expenses. That’s the best bet if you don’t want to use your phone outside the U.S., because phones sold that way are locked: You can’t use a low-cost SIM from a foreign carrier on them. Or, if you want the option to use a cheap, prepaid foreign SIM, you can pay a phone’s full price upfront to get AT&T’s Next discounted rates, which will leave you with a phone that’s unlocked for SIMs from carriers outside the U.S.
Verizon’s unsubsidized plans are also usually cheaper than its subsidized plans — but since almost all of its smartphones, iPhones included, are “world phones” that work overseas and come unlocked, there’s little reward for its higher-cost “Edge” unsubsidized plans unless you compulsively upgrade. (Please don’t.)
And then we have Sprint, which elected to celebrate the iPhone 6 and 6 Plus by crafting an alternate and sometimes Kafkaesque universe of price plans. If you pay an unsubsidized Easy Pay device price, unlimited data runs $50 a month on those devices instead of the usual $60, for two-year costs of $1,850 on an iPhone 6.
And then a new “iPhone for Life” option, available for no other make of phone, lets you rent an iPhone 6 for $20 a month for two years while paying the same $50 rate, and then swap out that device for the latest model. That costs just $1,680.
What about the standard two-year contracts that until recently led Sprint’s offerings? In our 2 GB iPhone 6 scenario, the total is $2,120 — more than Easy Pay or iPhone for Life, even though it rewards neither upgrading early nor keeping the phone past two years. (That estimate banks on the $80 per month Sprint’s site quoted when I stepped through preordering an iPhone 6 on Monday, not the $85 headlined elsewhere on its site.)
In fewer words, that contract looks like a tax on subscribers who are bad at math.
But while Sprint’s obfuscation efforts may be more ambitious than industry average, AT&T and Verizon have each done their part to ensure that you can’t confirm that you picked the right plan without breaking out a spreadsheet. Which is about as far as you can get from Apple’s ideal of elegant simplicity.