T-Mobile has given its wireless plans a major overhaul, betting that lower service prices, the elimination of two-year contracts, and "down payments" on smartphones will trump the traditional subsidy model of other carriers.
Because the pricing model for the new Simple Choice (a.k.a. "UnCarrier") is so different, comparing T-Mobile's new plans with the other major carriers is a little tricky. So let's walk through the plans and how they're different from Verizon, AT&T, and Sprint.
T-Mobile plan basics
With T-Mobile's new Simple Choice plans, the cost of service is always cheaper than the other major carriers, but the cost of hardware is more expensive. Still, when you do the math, T-Mobile remains cheaper in the long run as long as you're comparing the same type of wireless service.
Consider, for instance, Samsung's Galaxy S III on a two-year plan with 2GB of data on the UnCarrier plan. The base service costs $60 per month. The phone itself costs $110 up front, plus $20 per month for two years, for an overall cost of $590. In total, the two-year cost of owning a Galaxy S III on T-Mobile is $2030.
T-Mobile's plans include unlimited talk and text, and the ability to use your phone as a wireless hotspot at no extra charge. The same is true for AT&T's Mobile Share plans and Verizon's Share Everything plans. So let's compare: On AT&T, you'd pay $2240 over two years (and that's with just 1GB of data), for a subsidized Galaxy S III. On Verizon, you'd pay $2600 over two years.
AT&T does come out cheaper over two years if you get a bare-minimum individual plan at $70 per month, but that only includes 450 voice minutes and pay-per-text message. For unlimited talk and text, T-Mobile's plans are cheaper both up-front and over time. And unlike AT&T and Verizon, you save even more money after two years, when you're no longer paying off the full price of the phone.
The savings are even bigger for T-Mobile's Family Plans, which cost $100 per month for two lines with 2GB of data and unlimited talk and text. Each additional line costs $20.
Let's do the math for three lines, each with a Galaxy S III: On T-Mobile, the two-year price is $4650. On AT&T, the same service (with 6GB of data) costs $5280, and on Verizon, it costs $5400. Even if you got the bare minimum amount of data on AT&T's and Verizon's shared data plans, you'd still end up paying more during two years than you would on T-Mobile.
For the data hogs
Unlike AT&T and Verizon, Sprint still offers unlimited data, so it's worth comparing separately to T-Mobile's new unlimited data plans, which cost $70 per month.
For the Galaxy S III, the total, two-year cost is $2270 on T-Mobile. By comparison, Sprint's two-year cost is $2840. That's $110 per month for an unlimited talk, text and data plan, plus $200 for the phone. Once again, T-Mobile wins. The only way Sprint comes out ahead is if you get a plan with just 450 voice minutes for $80 per month, which brings the two-year cost down to $2120.
It's also worth noting that T-Mobile's hotspot options are more favorable for unlimited plans. On T-Mobile, you get 500MB of mobile hotspot usage with an unlimited data plan, compared to nothing on Sprint. A 2GB hotspot plan from T-Mobile costs $10 per month, compared to $20 per month on Sprint.
The bottom line
Pricing aside, T-Mobile has some drawbacks. Currently, you can't get an iPhone through T-Mobile, although this will change. T-Mobile's nationwide coverage generally isn't as strong as AT&T and Verizon, and T-Mobile is behind in rolling out its 4G LTE network. While T-Mobile is expected to turn on its LTE network this week, it'll be some time before the carrier is fully stocked with 4G LTE phones. Many metropolitan areas are covered by T-Mobile's speedy HSPA+ cellular network however, which is promoted as 4G but might be more accurately called 3.5G.
Strictly in terms of cost, your dollar will go further with T-Mobile, but the biggest benefits are for families, for customers who need unlimited talk and text, and for users who plan to keep their phones for a lot longer than two years. If you're okay with fewer minutes, less data or no included text messages, you may still save money in the long run by going with another major carrier instead. Do your homework!