NEWS ANALYSIS: Virgin Mobile USA will offer the iPhone 4 and iPhone 4S at no-subsidy, no-contract prices, but with prepaid rates that beat most other carriers and substantially reduce the total cost of ownership.
Virgin Mobile USA has entered the
prepaid iPhone world just a few days after Cricket announced a similar
arrangement with Apple. Virgin's plan is different from Cricket's in two ways.
The phones cost more, but the monthly prepaid rates are lower.
With Virgin Mobile
, which is a subsidiary of Sprint
and uses Sprint's CDMA network, the 16GB iPhone 4S costs $649, which is the
same as a contract-free, unlocked GSM phone purchased from Apple
. The two
major GSM carriers in the United States are AT&T and T-Mobile. Virgin is
also offering an 8GB iPhone 4 for $549. Apple sells an unlocked GSM iPhone 4
for the same price. Apple will also sell you an unlocked iPhone 3GS for $375.
Virgin's edge in the prepaid phone
space is that its monthly rates are lower than Cricket's. All of Virgin's plans include unlimited data
although that data will be throttled after 3.5GB. Virgin Mobile's least
expensive plan gives you 300 voice minutes for $30 per month. An unlimited
voice and data plan costs $50 per month. Cricket sells its unlimited voice and
data plan for $55 per month.
As enticing as these plans may
sound, they're not as new as they seem. Apple customers have been able to buy
the unlocked GSM phones online or at Apple stores for quite a while, and they've
been able to get similar rates from T-Mobile, which has been pushing prepaid
phones and plans recently, and from AT&T, which has had prepaid plans for
years. For example, T-Mobile will give you unlimited voice and data also for $50
per month, although the data will be throttled after 100MB to less than 4G
speeds. Since the iPhone doesn't do 4G, that may not matter.
AT&T also has a $50 unlimited voice and data plan
But for smartphones, there's a surcharge for data ranging from $5 to $25
depending on the amount of data. AT&T also has a $25 limited voice and data
plan, and it offers plans by the day or by the minute.
What this really means is that the
CDMA world, except for Verizon Wireless, has now joined the GSM world in the
ability to have a prepaid iPhone. The biggest difference is that you can use
the GSM iPhone anywhere in the world simply by buying a local SIM from a phone
store. CDMA doesn't work everywhere.