Matthew Yglesias, in Slate, says you’d have to be nuts to buy a phone on a contract:
If you buy a subsidized iPhone 5 from AT&T, the cheapest plan available costs $85 per month and only comes with 1 GB of data, a minimum of $2,040 over the two years of the contract. A basic T-Mobile unlimited voice plan with 2 GB of data costs $59.99 per month, $1,440 over the two years. In order to get that $450 iPhone discount, you would end up paying $600 more to AT&T over the life of the contract, and get less data….
Of course, customers have to actually recognize that the new deal is better. The subsidy model is basically a scam, but it only arose thanks to our own collective mental failings
All this is true – if you’re buying a single phone.
Otherwise, it’s wrong.
On the basic AT&T family plan with two lines, you get your $450 subsidy on both phones, and you pay $40 for voice plus $45 per phone; so $130 a month in all. On T-Mobile, with no annual contract, you’re paying $120 per month for your two phones; the $240 in bills you save over the life of the 2-year contract doesn’t come close to making up the money you lose by forgoing the $900 phone subsidy. AT&T has LTE coverage in major cities already, and Verizon has even more; T-Mobile doesn’t even start building LTE until next year. Now the T-Mobile family will have 2GB of data each, but the AT&T family will have only 1GB to share. 1GB is fine for me and my wife (I’ve never used more than 300MB in a single month) but if you want more, you can get 4GB shared between the two phones for $150 a month. You’re still coming out ahead on money, plus you can share your 4GB of data however you like instead of splitting it 2 and 2, and you’re on a faster network. By the way, if you want tethering on T-Mobile, you’ll have to pay extra: on AT&T’s contract, it comes with.
The details of the AT&T family plan aren’t really the point — the point is that people who write about tech are largely drawn from the universe of young single people. What applies to them does not apply to everyone!