TL;DR: If you have the cash to buy an unlocked iPhone 6 upfront, don’t mind running on the T-Mobile network, and mostly care about data as opposed to voice, you can save well over $500 over a period of two years compared to mainstream plans by AT&T, Verizon or even T-Mobile’s flagship plans.

NOTE: The following post is specific to the US smartphone market.

Over the last 2 years I have been on an AT&T business plan [1] which was not a bad deal by US standards:

• Upfront cost for the iPhone 5: $363.74 [2]
• Monthly cost: $74 ($69.99 plus taxes, fees and phone subsidy)
• Monthly data: 3 GB
• Contract duration: 2 years

I usually stayed under the included 3 GB, but occasionally went over and had to pay an extra $10 for an additional 1 GB. I made very limited use of voice and text.

As I wanted to get a new iPhone 6 Plus, I considered my options. With that same AT&T business plan, here is what the cost would have been for the next 2 years:

• Upfront cost for the iPhone 6 Plus 64 GB: $435.91 ($399 + tax) [2]
• Monthly cost: $74
• Monthly data: 3 GB
• Contract duration: 2 years
• Total cost of ownership: $2,211.90 ($92 / month)

The price of an unlocked iPhone 6 Plus 64 GB, bought directly from Apple, is $927.53 ($849.00 without sales tax). If we spread the total cost over 2 years, we get the following breakdown:

• Monthly device payment: $927.53 / 24 = $38.65
• Monthly service cost: $92 - $38.65 = $53.35

Looking at the monthly cost over the same period of time is useful as it allows us to do meaningful comparisons.

Now let’s look at the T-Mobile plans advertised for the iPhone 6. They give you quite a bit (unlimited talk, text and data with data throttling), but they are not cheap: they range from $50 to $80 per month, “plus taxes, fees and monthly device payment”, that is without phone subsidy. They mainly differ by the amount of 4G LTE data you get (from 1 GB to unlimited, and then “your data speed will automatically convert to up to 2G web speeds for the remainder of your billing cycle”). [3]

For my data usage I would probably need the $60 plan (which, remember, doesn’t include taxes and fees, so is probably at least $65 in practice) to have something equivalent to my AT&T plan. This is about $12 more per month ($288 more over 24 months) than my previous AT&T service.

In short, T-Mobile is not a particularly good deal if you care mostly about 4G data. [4] And, by the way, AT&T now has comparable prices as well.

But luckily there is more: T-Mobile also offers prepaid plans. And although the flagship prepaid plans that T-Mobile advertises are the same as their regular plans, you will find, hidden in plain sight, the following:

$30 per month - Unlimited web and text with 100 minutes talk

100 minutes talk | Unlimited text | First 5 GB at up to 4G speeds

Now get unlimited international texting from the U.S. to virtually anywhere included in your plan—at no extra charge.

This plan is only available for devices purchased from Wal-Mart or devices activated on T-Mobile.com

I had heard of this plan from friends who have been using it for quite a while with Android phones. T-Mobile clearly doesn’t want you to know too much about this: it is a little bit buried, and details of the plan are lacking. But it’s there! [5]

The question now is: does this work with the iPhone 6 Plus? The answer is yes, it does work! Here is what you have to do:

1. Buy your unlocked (“Contract-free for use on T-Mobile”) iPhone 6 (or 6 Plus) from Apple. [6]
2. Order the T-Mobile SIM Starter Kit with nano SIM. The kit is $10 but T-Mobile sometimes has promotions (I bought the kit for one cent).
3. Don’t activate the T-Mobile SIM which comes with your iPhone. [7]
4. Once you receive the SIM, place it in your iPhone.
5. Proceed with activation online [8] and choose the $30 plan. [9]
6. Profit!!!

So now let’s look at the total cost of ownership of this solution over two years:

• iPhone 6 Plus 64 GB, unlocked, with sales tax: $927.53
• Monthly cost of plan: $30 [10]
• Monthly data: 5 GB
• Total provider cost over 2 years: $30 × 24 = $720
• Total cost per month including the iPhone: $68.65
• Total cost of ownership: $1,647.53
• Savings over my earlier AT&T plan over 2 years: $564.38

Of course, this is still not cheap overall, but it’s a bit better, and in addition I get:

• 2 GB more 4G data per month than with the AT&T business plan
• tethering [11]
• an unlocked phone which I can use on many networks around the world
• no contract commitment whatsoever
• the ability to upgrade the phone at any time (just sell it and buy a new one!)
• the pleasure of giving money to a company a little bit less evil than AT&T and Verizon

There are drawbacks to this solution, in particular:

• It is unclear whether I could have ported my phone number and still qualify for a “new activation”. I did not try it because I use Google Voice to forward my calls anyway.
• You are on the T-Mobile network, and this means that you won’t have as much coverage as with AT&T or Verizon.
• This can be seen as a benefit or a drawback: you have to pay upfront for the phone, and T-Mobile won’t help you pay for it when you get prepaid plans.
• There are way less voice minutes (an option to call regular phones is using Skype, Google Hangouts, or other VoIP solutions).
• It is unclear whether fancy features such as Wi-Fi calling [12] or VoLTE are or will be enabled. But since these are voice features and this solution is for people who care more about data than voice, it doesn’t matter much to me.

No matter what, I will see how this fares over the next few months, and in the meanwhile I hope this post will be useful to others!

Disclaimer: This has been working for friends with Android phones and appears to be working for me so far with the iPhone 6 Plus, but I cannot be held responsible if you go this route and have issues of any kind.

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For another article comparing plans by major providers, see iPhone 6 Plans Compared: AT&T, Verizon, Sprint, and T-Mobile. Keep in mind that this looks at and iPhone 6, not 6 Plus (so about $100 of difference) and only 2 GB / month plans.