With Apple’s launch of the iPhone 6s (see “,” 9 September 2015), many people are considering an upgrade. But if you’re on one of the four major U.S. cellular carriers, things are likely to be quite different this time around. Depending on your situation, this may also be an excellent opportunity to switch to a different carrier.
Most Americans have become accustomed to the contract model of cellular service. Instead of paying the full $649 for a low-end iPhone, for instance, you paid $199, with a two-year service agreement. The carriers essentially subsidized the $450 difference, making up for it (and usually generating more profit) by increasing your monthly service charge and ensuring that you’d stay a customer for the duration of the contract.
That contract model is going the way of the DVD, with T-Mobile leading the way and Verizon dropping the contract entirely. Going forward, most people will shell out full price for an iPhone, either all at once or spread out through monthly payment plans. All the carriers offer some type of payment plan, and Apple, AT&T, Sprint, and T-Mobile also have plans that make upgrading easy. In exchange, you’ll pay less for service and won’t be stuck in a contract. This is how most of the rest of the world has long purchased mobile phones and service.
Here’s a rundown on how getting your next iPhone will work, but note that prices (and even the availability of an installment plan) may vary depending on your credit score.
Buying the iPhone -- First, let’s look at what’s familiar: contract pricing. The two-year contract price for an iPhone 6s will start the same as previous iPhones: $199. But where can you still get a contract?
From AT&T, for one, but only directly from AT&T. If you buy an iPhone through the Apple Store, you have to sign up for the AT&T Next installment plan or the iPhone Upgrade Program, which we’ll explain shortly. On the flip side, Verizon no longer offers contracts directly, but if you purchase an iPhone from the Apple Store, you can still get it with a two-year contract. Finally, Sprint still offers old-fashioned two-year contracts by itself and through the Apple Store, but it has new options as well. In general, though, contracts aren’t good deals, since the monthly embedded subsidy cost is often more than subsidized price of the iPhone.
So, let’s look next at what is arguably the simplest option: all four carriers will let you pay the full price for the iPhone 6s or iPhone 6s Plus. Here’s what each model costs from Apple:
Depending on your carrier and plan, paying full price may save you money in the long run. Because no-contract plans don’t include the cost of the device in your monthly bill, you’re incentivized to keep the phone as long as possible. If you don’t mind dropping big money up front and you can keep your phone working for more than two years, you’ll enjoy lower monthly payments and thus less money over time.
Not everyone will be able to swing $649–$949 up front for a phone. That’s OK, Apple and the carriers have you covered there, too, letting you split up the cost of the phone into 24 payments — making your bill similar to what it was under the contract system. Happily, we saw no finance charges for spreading out the cost in this fashion.
Verizon and T-Mobile make this payment plan simple. For either, the monthly payment for a 16 GB iPhone 6s is $27.08, for a total price of $649.92. Sprint offers an Easy Pay option that costs $27.09 per month. All three are fair deals.
The AT&T Next plan offers more choices, but is wildly confusing (note that the upgrade requires trading in your old phone in working order):
If you purchase an iPhone 6s via AT&T Next 18 (confusingly split into 24 payments), you would pay $27.09 per month for your iPhone 6s, the same as Sprint.
To add further chaos to the mix, T-Mobile and Sprint offer different payment plans that let the tech-savvy upgrade more often. Let’s look at each in turn.
T-Mobile offers, which lets you trade in your phone for another one up to three times per year. Of course, you still have to make the monthly payment, but as a launch promotion, T-Mobile offered the 16 GB iPhone 6 for only $15 per month. Folks who got in on that promotion will be able to  for no additional cost, and they’ll get priority on available stock. Pretty good deal, if you got it.
T-Mobile is also offering a. You can get an iPhone 6s for $20 per month or an iPhone 6s Plus for $24 per month. Presumably these are 16 GB models, and there’s no word on how much larger storage sizes will cost.
Sprint is offering an deal, where if you trade in a working smartphone, you can get an iPhone 6s for $15 per month, with a 22-month plan, but you can trade it in at any time. The $15-per-month price is a limited-time promotion — the usual price is $22 per month, which is what you’ll pay once you upgrade the $15-per-month iPhone 6s to the next model.
Be aware that with the early upgrade plans from AT&T, T-Mobile, and Sprint, you will have to trade in your old phone to upgrade, though you may be able to pay a fee to keep it. These plans are largely for those for whom the latest tech is important. Be sure to read the fine print carefully; the details can be tricky.
And now Apple has entered the iPhone installment game as well, making the carriers almost irrelevant.
iPhone Upgrade Program -- With the iPhone 6s, Apple is launching the iPhone Upgrade Program, which lets you upgrade every year and includes AppleCare+ protection.
Here are the monthly prices for the iPhone Upgrade Program:
Note that the iPhone Upgrade Program is more expensive than the carriers’ installment plans, thanks to the addition of the $129 AppleCare+ (it was $99 for iPhones prior to the iPhone 6s).
There are other catches as well. To sign up, you must go to a physical Apple Store, though you can schedule an appointment online. Also, the AppleCare+ accidental damage fee is rising from $79 to $99 for the iPhone 6s and iPhone 6s Plus. Like the other early upgrade plans, you’ll have to trade in your iPhone 6s if you upgrade to the iPhone 7. Lastly, the program requires iPhone activation with a national carrier — AT&T, Sprint, T-Mobile, or Verizon, so you can’t take advantage of it and then go to an off-brand cellular reseller.
The cool thing about the iPhone Upgrade Program is that the iPhone comes unlocked, so in theory, you could switch between national carriers at any time.
Let’s see what those plans look like now. Note that I’m not including taxes, fees, and miscellaneous discounts, so if you want to compare to a current contract plan, look carefully at a recent bill and take those numbers into account.
T-Mobile -- To call T-Mobile CEO John Legere a “character” would be an understatement. With his pink shirts, leather jackets, long hair, and profane tirades, you’d be forgiven for mistaking him for a rock star. Well, he is a rock star of sorts, and he is single-handedly changing the American cellular market.
Since 2013, T-Mobile has branded itself the “Un-carrier,” dropping contracts and subsidies in an attempt to become more profitable. The moves weren’t always popular, such as when T-Mobile abandoned, but  since it became the Un-carrier.
If you’ve been with T-Mobile for a while, none of this comes as a surprise. As for plans, the plans are well named: they include unlimited voice minutes and SMS text messaging, and a given amount of data for a fixed monthly price.
Plan prices get more complex but cheaper with a. Two lines cost $80 per month: $50 for the first line, $30 for the second. Both lines feature unlimited talk and text and 1 GB of data. Three lines will run you a total of $90 per month, including the third line at $10 per month, again with unlimited talk and text, plus 1 GB of data for each line. Each additional line, up to six total, costs another $10 per month.
If you need more than 1 GB of data per month, things get tricky, but stick to the same pattern. For the first line, each higher tier of data is an extra $10 per month: $60 for 3 GB, $70 for 5 GB, and $80 for unlimited. The same is true for the second line, but prices are $20 lower: $40 for 3 GB, $50 for 5 GB, and unlimited for $60. Additional lines follow the same pattern, but are $20 cheaper than the second line, so unlimited would be $40.
For an individual, T-Mobile is cheap and easy: $50 per month for 1 GB. But let’s say that you and your spouse each want 1 GB of data every month. That family plan would cost $80 per month total. Add a child with 1 GB of data to the plan and the total increases only by $10, to $90.
There is good news about T-Mobile’s data usage caps. For one thing, you will not be charged overages. The plan covers only 4G data; once you run out, you’re merely dropped back to 3G speed, but you can buy more 4G data if you choose. Second, T-Mobile includes a that excludes many popular music services, including Apple Music, from the data limits.
T-Mobile also has for those who frequently travel to other countries. The Simple Choice plan includes unlimited calling and texting in Canada and Mexico, and unlimited 4G LTE data. For another 120 countries, the Simple Choice plan includes unlimited data and texting; calling will be billed different rates depending on the country.
The main problem with T-Mobile is that isn’t as good as Verizon Wireless’s or AT&T’s, though it’s steadily improving.
Verizon Wireless -- Following in T-Mobile’s lead, Verizon also recently dropped contracts. If you’re currently in one, you can keep it until it expires, switch to one of the new, simpler, contract-free plans (but with a higher device fee until your contract is paid off).
 now comes in four main tiers:
Like T-Mobile, all of Verizon’s options come with unlimited talk and text. Unlike T-Mobile, Verizon charges overages of $15 for each additional gigabyte of data, though you can upgrade your plan at any time. Verizon no longer has family plans as such, but data is shared among all devices on the plan.
These plans may sound cheaper than T-Mobile’s, but you also have to pay a monthly access fee per device: $20 for a smartphone, $10 for a tablet, or $5 for a connected device, like a Wi-Fi hotspot or an LTE-enabled smartwatch (not the Apple Watch). If you’re still on a contract and switch to one of the new Verizon plans, the access fee will be doubled for the device on contract, so it would be $40 for a smartphone instead of $20.
For an individual with 1 GB of data and an iPhone, the total cost would come to $50 per month — identical to T-Mobile. For a couple sharing 3 GB of data, each with an iPhone, the total would come to $85 per month, $5 more per month than T-Mobile but for an additional 1 GB of data. For a three-person family, it would be $105 — $15 more than T-Mobile.
When Josh does the math to compare this to his family’s current contract plan, it’s not a terrible deal. He and his wife share 3 GB of data, and pay a total of $133.76 per month for service (not counting taxes, fees, and discounts). With the new Verizon Plan, they would be paying only $85 (after their existing contracts end), but of course the cost of their iPhones wouldn’t be included in that.
On the international side of things, Verizon has that aren’t bad for Canada and Mexico, but which seem ludicrously expensive (particularly for data) for other countries.
AT&T -- The new AT&T Next program may be complicated, but what hasn’t changed are the plans. Like plans from other carriers, they feature unlimited talk and text and let you share data with other lines. As with Verizon, there are numerous tiers of data, but the most comparable to the other carriers are:
As with Verizon, there’s a monthly access charge that varies by device: smartphones on AT&T Next or No Annual Contract cost either $25 (for 5 GB or lower data plans) or $15 (for 15 GB or higher data plans), tablets and LTE wearables are $10, and Wi-Fi hotspots are $20.
So an individual with 2 GB of data would pay a total of $55 per month, or a bit more than T-Mobile or Verizon, but with 1 GB more data. A couple sharing 2 GB of data would pay $80 per month, the same as T-Mobile. A family of three sharing 2 GB of data would pay $105, or $125 if 5 GB of data was necessary.
Each additional gigabyte of data costs $15 extra ($20 on the 300 MB plan), though unused data from one month rolls over into the next month (but only month-to-month, not cumulatively).
Adam, Tonya, and Tristan share a 2 GB family plan now, and pay about $130 per month for it. Only one of their iPhones is ever under contract, but it looks as though switching to a contract-free plan would save about $25, or roughly the per-month cost of a new iPhone. So it’s essentially a wash, though occasional overage and international charges increase their bill (see “,” 19 June 2015, and “ ,” 31 July 2015).
As noted in our previous coverage, isn’t great, with the 30-day AT&T Passport packages offering unlimited texting, but expensive data and voice minutes:
Sprint -- Sprint has an easy ($85 if you stick with a contract). That’s unlimited talk, text, and data.
However, the gets more complex, since there’s no unlimited option. Sprint offers a number of data plans, including:
The confusion comes with the access fees, which cost $40 per device for smartphones under contract, but which are discounted by $15–$25 for non-contract customers, based on the selected data plan. (AT&T works like this too, though it’s not as obvious since the company is deprecating contracts.)
So, for 2 GB shared between a couple not on a contract, the monthly fee is $25 for the data, plus $25 per device, for a total of $75 that’s cheaper than all the others. For three people sharing 2 GB, the bill would be $25 for the data plus $75 for the access fees, for a total of $100; bump up to 4 GB and that increases to $115.
If you go over your data limit, each additional megabyte costs 1.5 cents, which equals out to $15.36 per gigabyte, which is comparable to the competition.
For international travellers, the free includes unlimited texting, free 2G data, and $0.20/minute calling. 100 MB of 3G data for 1 day can be added for $15, 200 MB of 3G data for 7 days costs $25, and 500 MB of 3G data for 14 days is $50. The “included countries” are quite restrictive, including Canada, Mexico, Australia, New Zealand, and the UK, for instance, but only a handful of other countries in Europe and Asia. Confusingly, the Sprint Open World program, which is also free, provides unlimited calling and texting, plus 1 GB of high-speed data in Canada, Mexico, and most other countries in Latin America. If you’re sticking to the Americas, you’re probably fine; otherwise, read Sprint’s fine print carefully.
As with T-Mobile, Sprint’s challenge is, which isn’t as complete as Verizon’s or AT&T’s.
The Bottom Line -- Many of you are stuck with whatever cellular carrier has the best service where you live. But for those with a choice, here’s a quick breakdown for an individual looking for a non-contract plan with 1–2 GB of monthly data:
Here’s a breakdown based on a two-person family plan with 2–3 GB of monthly data:
For the couple with a child, again trying to aim for 1–2 GB per person, here’s how it works out:
It took us hours to sift through the carrier sites to put together these lists, and frustratingly, it’s difficult to make exact comparisons, due to the carriers offering differently sized data plans. Nonetheless, here are our conclusions.
We were surprised to find that Verizon, which generally has the best coverage in the United States, was competitive in pricing and reasonable for travel within Canada and Mexico. But avoid Verizon if you do a lot of other international travel.
T-Mobile does generally well, and has the most compelling set of bonuses, including free international roaming, free music streaming, data rollover for 3 GB and larger plans, and reduced speeds instead of overage fees if you exceed your data cap. Its weak network coverage is bolstered by Wi-Fi calling.
AT&T was a solid middle performer, and when it was notably more expensive, that was generally due to having a larger data plan than the others. Rollover data is welcome, but AT&T’s international plans are weak.
Sprint is just weird. It had the most expensive individual plan, but with unlimited data. Then it was the cheapest for a two-person family plan, but expensive again for the three-person family. The company’s international story is complicated and restrictive, but largely free in supported countries. Even data overages are unusual, being billed per megabyte, rather than per gigabyte, even though the raw cost is the same. Like T-Mobile, Sprint’s coverage is weak, but is bolstered by Wi-Fi calling.
What Does It All Mean? -- We’ve been pondering the move to contract-free plans coupled with installment-based iPhone purchases all week, and Apple’s introduction of the iPhone Upgrade Program threw in yet another variable. It seems safe to make the following conclusions:
Overall cost of ownership won’t be much different for most people under contract-free plans, unless you can keep using your iPhone for more than two years. You do get more flexibility to switch carriers, which you may be able to parlay into lower bills. (In the future, we’ll look into whether it’s possible to save a lot more via pre-paid plans or MVNOs.) If money isn’t an issue, these plans make it easier to upgrade more frequently.
Companies prefer small regular monthly payments to larger one-time payments in order to even out revenues, and customers are less likely to switch to a competitor. Consumers also often prefer this approach as a way of regularizing a limited budget. Regardless, it’s nice to have the choice.
The iPhone Upgrade Program will undoubtedly make Apple money due to the forced inclusion of AppleCare+. It’s also possible, even likely, that carriers buy iPhones from Apple at a discount, so by selling direct to consumers at full retail, Apple would make more.
Regardless of the revenue deal, the iPhone Upgrade Program will reduce the likelihood of people switching to Android smartphones and create a tighter relationship between Apple and iPhone users. That’s good for Apple, and comes at the expense of the carriers. Could it be a long play on Apple’s part to have a customer base for its own cellular carrier? The company has emphatically denied such rumors, but it wouldn’t acknowledge such a project if it were true (see “,” 4 August 2015).
In the end, not much is really that different, and the move away from contract plans seems to be generally positive for both consumers and Apple, but dangerous for carriers, who may end up becoming generic utility providers before long.