T-Mobile Adds iPhone, Announces Contract-Less Data Plan

PHOTO: John Legere, CEO and President of T-Mobile USA, makes an announcement during an event about new contract pricing, March 26, 2013, in New York City.
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T-Mobile, welcome to the iPhone club. Finally.

T-Mobile USA, the nation's No. 4 cellphone company, will start selling Apple's iPhone 5 April 12, and it also will offer cheaper, contract-less data plans, the carrier announced today at its New York City event.

This makes T-Mobile the first major U.S. carrier to offer the iPhone 5 with no contract.

"If you come to T-Mobile you have signed your last contract. They are dead. Gone. No more," said T-Mobile's CEO John Legere said.

While T-Mobile's biggest competitors, AT&T and Verizon, require customers to lock into a two-year service contract in exchange for discounts on smartphones, T-Mobile announced it is getting rid of device discounts and service contracts to offer a "radically simplified" installment payment plan on a "full device portfolio."

The new plan will also allow customers to upgrade phones when they want.

Starting April 12, the iPhone 5 will be available on T-Mobile's newly announced 4G LTE network for a down payment of $99, and then customers can pay off the rest in $20 monthly increments for two years. The iPhone 4 and 4S will also be available.

The data plans, which were posted on the company's website Monday before today's media event, start with unlimited talk and text messaging with 500 megabytes of data downloads for $50 per month for the first line, and increase to $60 a month for 2 gigabytes of data, or $70 a month for unlimited data usage.

In comparison, Verizon Wireless sells the 16 GB iPhone 5 for $199, with a new two-year contract, charges $90 per month for unlimited talk and text messaging with 1 gigabyte of data and offers 2 gigabytes for $100 per month on its Share Everything plan. AT&T sells the iPhone 5 for the same price, with a new two-year contract, but its Mobile Share plan offers unlimited talk and text messaging and 1 gigabyte of data for $85 per month, while the same plan with 4 gigabytes of data costs $110 per month.

T-Mobile's new rates combined with offering the iPhone 5 at a low cost will save consumers "more than $1,000" on the Apple smartphone, when compared to owning the device on AT&T's two-year contract, Legere said.

The latest Android photos are also coming to T-Mobile, Legere announced. The Samsung Galaxy S4 is coming to T-Mobile May 1, for $99. BlackBerry Z10 will be available nationwide today for $99.

The HTC One is "coming soon," Legere said, but will also be sold for $99.

The monthly payments to own the phone will be separate from service fees -- new smartphones will cost the additional $20 per month, Sievert said, while lower-end phones have smaller fees.

Without a contract, T-Mobile's Chief Marketing Officer Mike Sievert said customers who want to leave T-Mobile can do so without any further obligations other than the phone payments, which they can finish paying off or trade in the phone for a "fair market value credit."

But the tradeoff for cutting the price on the phone and service plans has been that T-Mobile's data network coverage has not as strong in rural areas as other carriers -- Verizon and AT&T already have established 4G LTE networks.

T-Mobile today announced it is undergoing a major "modernization" of its network. The company is adding additional bandwidth -- 50 percent more than AT&T, Legere said -- and is rolling out a new 4G LTE network.

"Today, T-Mobile launched its state-of-the-art 4G LTE network in seven major metropolitan areas, including Baltimore; Houston; Kansas City; Las Vegas; Phoenix; San Jose, Calif.; and Washington, D.C.," its news release said.

T-Mobile, which announced in December it had reached an agreement with Apple, is the last major U.S. carrier to sell the iPhone. But this is a big deal for current T-Mobile subscribers because the new no-contract option will allow them to switch phones more easily and for less money over time.

With T-Mobile, this is the first time Apple's iPhone is available on all four major U.S. mobile carriers. Sprint, Verizon and AT&T all offer the iPhone. AT&T was the first to carry Apple's iPhone when it debuted in 2007.

For lack of the iPhone, a high-speed LTE network and some other benefits, T-Mobile fell behind the other major U.S. carriers and lost customers. But 2013 might be the year the carrier turns it around with its plans to acquire Metro PCS, launch its LTE network and now offer those all-important Apple products.

ABC News' Tech Editor Joanna Stern contributed to this report

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