Let's break this story down into three sections: Implications for T-Mobile and Apple and then a rerun of the math to see if you really get a better deal by ditching the big three.
T-MobileTo be clear, other than adding iPhone to its stable, this is nothing new for T-Mobile. It's basically looping the iPhone into the mix with the smartphones it already offers. As I'll detail in the math section, that's merely a "no-contract," pay-almost-full-price-for-your-device installment plan. Absolutely excellent marketing, but probably less of a game changer than I initially thought. But that doesn't mean this isn't a big deal.
AppleThis shakes up the industry in a significant way. Apple's acceptance of T-Mobile's installment plan signals yet another shift in the way the company does business. I have to think that before Apple signs off on giving T-Mobile iPhone, it approves how it will be presented and sold to the consumer. Make no mistake about it -- alongside existing deals on iPhone 4 and 4S -- this is the 'cheap iPhone' we have been hearing rumors about. Or at least it better be. Because a "cheap iPhone" would be absolutely awful news for Apple. So if Apple is going to go "cheap," it might as well do it in a way that will not impact its margins much, if at all. I presume T-Mobile pays Apple the same way every other carrier does, except the "un-carrier" will make back that upfront cost direct from the installment plan, not via monthly usage charges.
This represents a compromise by Apple, but it definitely will not dilute its brand image like offering a $100 or $200 phone made of plastic would.
The MathSo here's the math, as compared to buying an iPhone 5 via Verizon ( VZ). For the phone, you pay Verizon $199. That's it. With T-Mobile, you put $99 down and pay $20 each month over 24 months, bringing the total cost of the device to $579.
While it sounds great to say you have no contract, you, in effect, do. You're on an installment plan for the phone. You make the down payment of $99 and then you owe T-Mobile $480 for the iPhone 5 it sold you. Want to skip out early, you need to pay off the remaining installments. So, how is this not a contract? From that perspective, it's hardly any different than the predicament you're in with Verizon, AT&T ( T) or Sprint ( S). Granted, if you bail from a traditional contract, you'll pay more. As much as I hate to admit it, I recently escaped from an AT&T three-line contract with roughly one year remaining. That set me back $647.32. That's quite a bit more than the $220 you would pay to get out of your it's not really a contract with T-Mobile after one year. If T-Mobile improves its network by expanding 4G LTE ( and fast because there's nothing like the experience I have daily with Verizon's 4G LTE) and comes through with a trade-in/resale program so users have versatile upgrade options, this news could really change the game. At this point, however, T-Mobile does save you money, but it's still a contract and the experience won't be quite the same -- warts and all -- as it is with AT&T, Verizon or Sprint. Follow @rocco_thestreet -- Written by Rocco Pendola in Santa Monica, Calif.