iPhone Moves Into Virgin Mobile Territory With New Prepaid Plans

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.