Why Sprint Offering Unlimited Data for iPhone 5 Is No Big Deal

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[Author's Note: I made some updates to the math comparing the cost of Sprint and AT&T plans to include the additional cost of text messaging with AT&T. The title has also been changed to more accurately reflect the tone of the article.]

Rumor has it that the iPhone 5 will be available sometime in October. Rumor also suggests that Sprint will be added to AT&T and Verizon as a third major carrier offering the iconic Apple smartphone. Now, a new rumor hints that Sprint will not only offer the iPhone 5, but will also continue to offer its unlimited data plan--giving Sprint a distinct, yet probably short-lived advantage over its rivals.

There is a tipping point from vague innuendo to speculation to foregone conclusion, and the various iPhone 5 rumors have reached a critical mass where they seem more likely than not despite the lack of any details or concrete evidence. So, for the sake of argument, let's assume the iPhone 5 is coming in October, that Sprint will offer it, and that Sprint will allow iPhone 5 users to subscribe to its unlimited data plan.

Sprint iPhone 5
Get an iPhone 5 on Sprint if you choose--but don't do it for the unlimited data plan.
That sounds great except for two things. First, unlimited plans sound impressive, but aren't always what they're cracked up to be. Second, it is very likely that Sprint will use the lure of unlimited data to attract iPhone 5 customers away from its rivals, but it will eventually adopt the tiered and capped data plans used by AT&T and Verizon once the initial iPhone 5 rush subsides.

Why are unlimited plans overrated? Have you ever gone to an all-you-can-eat buffet? All you can eat sounds awesome, but you end up paying twice as much for mediocre food and can't actually consume enough to get your money's worth.

The same thing happens with unlimited voice and data. Sprint's unlimited voice and data plan is $99 per month. That melds voice and data together, making direct price breakdowns more difficult, but compare Sprint's $99 to what you can do at AT&T. With AT&T you can basically get the same thing for 15 percent less--or $85.

AT&T offers a 450-minute voice plan for $40 per month. Granted, 450 is very different than "unlimited", but that 450 comes with rollover minutes (carrying unused excess minutes over into a pool you can use the next month), 5000 minutes dedicated to nights and weekends, and unlimited mobile-to-mobile calls. So, you may only have 450 "anytime" minutes, but if you are calling other mobile phones or making calls on nights and weekends, and carrying over extra minutes from one month to the next, the net result is essentially "unlimited".

For text messaging, you need to tack on $20 per month for the unlimited messaging plan with AT&T. You can go with the pay-as-you-go method, but at 20 cents per message you would spend the same $20 after only 100 messages, so the unlimited messaging plan is sort of a no-brainer if you do any texting at all.

Then you tack on an additional $25 per month for the 2GB data plan, and you end up spending $85. According to AT&T, most users can get by with the $15 per month, 200MB data plan, and the vast majority never use more than 2GB, so "unlimited" is really just a marketing term. The reality is that even if you go over the 2GB cap, additional data is available for $10 per gigabyte. You'd have to use more than 3GB of data per month before the Sprint "unlimited" plan becomes a better deal.

I am fairly sure you can work out similar math using the Verizon plans and caps. So, "unlimited" isn't necessarily a good thing. I certainly wouldn't make a decision to switch wireless providers based only on the availability of an "unlimited" data plan.

Ultimately, odds are fair that Sprint will phase it out and follow suit on tiered and capped voice and data plans. Granted, you will most likely be grandfathered in if you already have it, but wireless providers have a way of making it difficult to hang on to those grandfathered plans they no longer support, and if you ever want to switch phones or add a line you'll be stuck with the new limited data plans.

It's a great marketing gimmick, but don't fall for the "unlimited" iPhone 5 bait.

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