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Apple Now Offers Unlocked iPhone 5: Is It Worth the Cost?By Adam Dickter
Posted: November 30, 2012 10:55am PST
Like the newest iPhone but can't make up your mind on carrier options? Or, do you plan to use if for travel?
Now you can buy it -- new -- and make up your mind later. Apple this week began selling the world's most popular smartphone unlocked -- meaning you can use it on any carrier that uses the GSM standard. Since the iPhone 5 hasn't been around long enough for anyone to be off contract, it's the first opportunity to bring an iPhone 5 to a new carrier that wasn't purchased by that carrier.
Choosing None of the Above
On Apple's Web site, after choosing black or white, consumers can now choose between plans from AT&T Mobility, Verizon Wireless or Sprint Nextel, or none of the above. The unlocked phone, however, won't work on Verizon Wireless or Sprint without being jailbroken, a practice on which Apple frowns.
The move benefits struggling fourth-place carrier T-Mobile, which has been trying to lure more iPhone users to its unlimited data plans, though it does not have a distribution agreement with Apple. In September, T-Mobile boasted that it already has more than a million iPhones on its network through its Bring Your Own Phone program and moved to lure more iPhone 4S customers with an unlimited data plan -- unavailable on Verizon and AT&T -- that it says is also cheaper than AT&T.
Of course, an unlocked phone comes with a higher price tag: $649 for the basic 16-gigabyte model, $749 for the 32 GB, or $849 for the 64 GB iPhone. The carrier-subsidized price, respectively, is $199, $299 or $399.
We asked some experts for their take on when it pays to splurge for the unlocked model.
"Only if they are going to change carriers in less than the two-year contract term, or if they want to buy it here and take it overseas because it's cheaper here," said Ken Dulaney of Gartner Research. "Specialized situations only."
Consumer devices expert Avi Greengart of Current Analysis noted that unlocked options are limited in the U.S.
"T-Mobile's plans are less expensive than AT&T," he said. "However it is extremely important to note that one key feature of the iPhone 5 -- LTE data speed-- is entirely network dependent; T-Mobile USA does not currently have LTE."
Good Military Option
Greengart said an unlocked iPhone is also cool for people who like to upgrade more often than biannually. "iPhones hold their value well and are easily resold," he said. "Also, people who move around a lot and don't want to be locked into contract terms that they won't fulfill -- for example, members of our military who might be deployed overseas."
Kirk Parsons of J.D. Power and Associates noted that once consumers sign up with a no-contract carrier, particularly if that carrier has a cheaper plan than rivals, the longer they keep that plan the better chance they will recoup their investment.
"Typically, the longer you are on a non-contract plan, the payout becomes more cost-effective versus a contract plan," he said. "However, at price points of over $600, an unsubsidized iPhone may be high for most customers to consider."
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