The T-Mobile iPhone: How to Do the Math

Here's how to run the numbers to see if you can get a good monthly deal on the T-Mobile iPhone.

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T-Mobile is now taking pre-orders on the iPhone 5, and hoping to lure people over from larger carriers with the promise of cheap wireless service.

While there’s no shortage of articles and charts comparing T-Mobile’s new plans to other carriers, I’ve come to realize that it’s hard to make those comparisons in a general way. Every user is different, so doing the math based on hypothetical situations might not help you.

So rather than trying to figure out whether the T-Mobile iPhone is a good deal for you, I’ve put together some steps to figuring it out on your own. Teach a man to fish, and all that:

  1. Start with the base cost of T-Mobile service. For individuals, that’s $50 per month for 500 MB, $60 per month for 2 GB and $70 per month for unlimited data. All plans include unlimited voice and text, and there are no overage fees if you go over your data limit–just slower speeds.
  2. Families: For a second line, add another $30 per month for 500-MB plans, $40 for 2 GB, and $50 for unlimited data. For each line after that (up to five lines total), add another $10 per month for 500 MB, $20 for 2 GB and $30 for unlimited data.
  3. Add another $20 per month, per iPhone, which goes toward paying off the device in monthly installments over two years.
  4. Compare the total to your current monthly wireless bill.

Now you know how T-Mobile compares with your current carrier for the first two years of service. After two years, your bill on T-Mobile will be $20 per month cheaper, at least until you buy a new phone.

But you should also consider that the up-front cost of the iPhone is $100 cheaper on T-Mobile than it is everywhere else. This can make a big difference on the total, two-year cost of ownership, especially for families with multiple iPhones. Therefore:

  1. Multiply your current monthly bill by 24. Do the same for what your monthly bill would be on T-Mobile.
  2. Add $200 per iPhone to the total for your current carrier. Add $100 per iPhone for T-Mobile.

Now you have the total, two-year cost of ownership of the iPhone 5, both on your current carrier and on T-Mobile.

Besides money, there are other factors to consider. Right now, not all of T-Mobile’s network provides faster 3G and 4G speeds on the iPhone. Check out this map to find out if those speeds are supported in your area. You’ll get slower 2G speeds everywhere else. (Correction: T-Mobile’s iPhone is a tweaked model that supports the carrier’s AWS spectrum. That means it’ll get the same 4G coverage as any other T-Mobile phone. T-Mobile’s website has a map that shows all 3G and 4G coverage.)

As for 4G LTE, T-Mobile only has it in seven markets for now: Baltimore, Houston, Kansas City, Las Vegas, Phoenix, San Jose and Washington, D.C. Other carriers have much broader 4G LTE support, especially AT&T and Verizon.

On the plus side for T-Mobile, every plan includes 500 MB of mobile hotspot use for free, and 2-GB plans get an extra 2 GB of mobile hotspot use–although both count toward your monthly data limit. That means you can get online with your tablets or laptops by using your phone as a wireless hotspot. Some carriers, such as Sprint and Verizon, charge extra for hotspot use if you have unlimited data, and AT&T doesn’t allow hotspot use without a 5 GB plan or shared data plan.

In most cases, if saving money is the goal, odds are T-Mobile will be cheaper, or will at least give you more service for roughly the same price.  But by doing the math, you can figure out how much you’ll save, and whether that’s worth the risk of dealing with T-Mobile’s smaller network.