Why I bought my iPhone 5 unlocked

Having had my iPhone 5 for just over a month now, I can say I’m really happy with it. Initially the battery life was horrible (4 hours of usage max before it died) but a recent update to the software thankfully fixed that. Since then I’ve been wholly addicted to all the apps and games I missed over the summer while substituting with an iPhone 3.

Even though I was due for a contract upgrade, which would have allowed me to get the iPhone 5 at its subsidized price of $159 or $259 when I bought it, I chose to buy it unlocked for $850.

Understandably, a few people thought I was crazy. Why pay hundreds of dollars more for something you can get for a lesser price? But I have my reasons, and as promised, here they are! Before we get started, I want to point out that Canadians pay ridiculous amounts for cellphone service. All carriers charge a ton of money for services that can be had for half the price in any other developed country. Actually, Canadians pay the highest cellphone costs in the world.

 

Awesome. You practically need to take out a short term loan to pay your monthly bill here. If I lived in any other country, I might not have to be so strategic, but because I hail from the snowy white north, I have to plan around some serious set backs to enjoy this luxury.

Why I bought my iPhone 5 unlocked:

1. I didn’t want to sign another contract. I re-signed a 3 year contract with my cellphone provider when I bought my iPhone 4 two years ago. As you know, someone decided to help themselves to my iPhone last spring. Sadly, when someone steals your cellphone they don’t steal your cellphone contract with it, so I was left using a borrowed iPhone 3 on my original contract. Bummer. Now if I lost my iPhone 5, I won’t be stuck paying the contract for a phone I don’t have, so I can always reduce my services while I use a cheaper phone in the interim.

2. An unlocked phone can be used with any carrier. This means I’m free to move to the USA or Europe, take my phone with me, pop in a local sim card, and continue on my merry way. When a cellphone is locked to a certain carrier, it cannot be used with any other.

3. An unlocked phone can be used pay-as-you-go with any services you choose. Ever sign a cellphone contract with services you didn’t need, like 400 minutes of talk time? I sure did. Who even talks on the phone anymore when you can text?? A cellphone without a contract lets you mix and match the services you want, resulting in a lower bill. Here’s a fun fact: when signing a new cellphone contract, in order to get the subsidized price on the new iPhone, you need to select a cellphone plan that costs at least $50/mo or $60/mo. If you’re paying your cellphone company $50+ per month for a 3 year contract, they’re going to make minimum $1,800 off of you. The $159 pricetag on the iPhone isn’t such a steal now is it?

4. Unlocked phones have a high resale value. Two-year old iPhone 4′s are still selling for $400-$500, and assuming my iPhone 5 is worth the same 2 years from now, it means it will have only cost me half of what I actually paid. iPhones locked to a carrier can still be sold for a good price, but it’s trickier.

So I understand why many people balked at the $850 pricetag on my new iPhone, but I really couldn’t rope myself into another 3 year Canadian cellphone contract at $60/mo.  I want the freedom to take my phone anywhere and use it just for data & texting!

 

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Comments

  1. I definitely agree with not getting a locked phone, but I don’t know why you would choose such an expensive phone to do it with! I mean $850 is still $850 no matter how you slice it. I think the best option is to get the phone through a carrier that subsidizes the phone prices a little bit but doesn’t have contracts (i.e Koodo and maybe Virgin in some cases).

    I just got a brand new Samsung Galaxy S2x (dual core, 16GB internal, 4.5″ screen) for $250 + tax – $100 gift card – $150 put on the tab. Out of pocket after factoring in the gift card and tab, it cost me $13 and I have no contract.

    If you just want the phone, then you cancel immediately and tack on the extra $150+tax for the tab which makes it about $182.50 for a brand new awesome smartphone free and clear.

    Need to put it on another carrier? You can buy an unlock code on Ebay for a couple of bucks (less than $15 for sure and sometimes as little as $1).

    Then you can still sell it a year or two later as an unlocked phone for potentially more than you paid for it and upgrade to the latest 6 month old phone.

    • Well, you certainly could have given me a gift card for my phone if you like.

      I nearly bought a Samsung but at the last minute decided to stick with Apple. In a few years when I change phones again I’ll probably make the switch.

      If you cancel your contract, you do not to keep the phone “free and clear” for its subsidized price. Not only is the phone locked to that carrier, you would have to pay a hefty cancellation fee (usually $20/mo for the remaining months of the contract, which in this case would be 36).

      Paying someone on eBay to illegally jailbreak your phone is not “unlocking” it. It voids the manufacturer’s warranty and can do irreparable damage to the software, leaving with you with what is essentially a very expensive paperweight.

  2. Verizon wirless sells their iphone 5 already unlocked, so you can pop in a local sim when you travel. ATT and Sprint will unlock it upon request. It shockes me how expensive your cell phone plans are in Canada and that you are locked into a 3 year contract… that is just NUTS!

  3. It’s funny, in the US, $60 a month would seem like a totally reasonable cell phone bill to me. I know your numbers say that the average revenue per customer is lower than in Canada, but if you have an iPhone on Verizon or AT&T (the two major carriers here, about 50% of market share), it will easily run you $90+ for unlimited texting and a reasonable data package.

    There are cheaper options (buying an unlocked iPhone and using TMobile for $50 per month), as well as more DIY options which I am starting to look into, but gosh that stupid phone is expensive. I’ve been a loyal iPhone devotee since the first one came out in 2007, but i am starting to seriously consider going Android and finding a cheaper option. I even thought for awhile about going back to a non smart phone, but then I realized I am totally addicted/reliant.

    At any rate, I’m glad you went with the option that made the most sense to you! :)

    • I had T-Mobile when I lived in the US and I really liked it.

      My cellphone bill right now is about $65/mo but honestly I only need unlimited texting and data. Hell I almost don’t need unlimited texting since most of my friends have iPhones and we could use iMessage… probably 2GB of data would be all I need.

  4. An unlocked phone is the way to go. I travel frequently and many are places that are using the GSM network so all I need to do is purchase a prepaid SIM, load it up with some credit and away I go using my current phone. I can confirm that cellphone costs in Canada are absolutely ridiculous! I finally finished up my 3 yr contract for my phone earlier this year and I refuse to enter into another one. I’d rather save up and buy my phone outright for more than go back with a contract deal.

  5. John S @ Frugal Rules says:

    Wow, that’s crazy your rates are that high. I thought ours in the States were too high! Looking at your argument, it does make sense why you chose the path you did. Especially with the resale value, it would totally be worth it to me to not have to sign a contract.

  6. That is an insane amount of money to pay for a cell phone….but it sounds like you had your reasons. And at the end of the day, it’s your money =)

  7. You can get your phone unlocked through your carrier once your contract is up or cancelled for around $50 now. Via Rogers or Telus, not sure about Bell and this includes iPhones.

  8. I don’t have an iphone 5, but I do have an iphone and I bought mine unlocked too. I didn’t want to sign yet another contract with high rates and be locked in for 2 years. Considering I move a lot it felt smarter to get an unlocked phone I could take with me.

  9. Ok I will bite. The iphone 5 is available for $159 if you take a 3 year contract. If your monthly bill is $60, at the end of 3 years you would have paid 60*36 + 159 = $2319. You have now paid $850. So 2319 – 850 = 1469. $1469/36 = $40.80. So even if you drop your monthly bill to 40, you are just breaking even on the phone. If you reduce your monthly bill to $35, then you save $200 over the period of 3 years. Also, I just checked eBay and 2 year old USED iPhone 4 which is unlocked is selling for around $200-$250 on an average.

    I am not saying that your decision to buy the phone unlocked is a bad decision. It does give you freedom to switch carriers if you are not happy with the service. But there just isn’t a strong financial backing to this desicion

  10. I managed to get my current phone as a discard from work for free, less what I paid to unlock it and get a sim card. I’m so very happy to not be locked in to a plan and a term!

  11. Interesting! I didn’t actually know the difference between locked vs. unlocked. That makes sense though, why you bought it! I just got the iphone5 and I LOVE IT. I can’t believe how fast it is!

  12. I totally agree about buying an unlocked phone. I went to oz and could not use my cellphone. I had to buy a cheap phone I could put a sim card into all the while still paying my bill back home. Next time I will definitely go with an unlocked iPhone!

  13. The price for the US isn’t too far behind you but we only have to sign two year.contracts. it was worth it for me but isn’t for everyone.

  14. I don`t think it`s crazy at all! The thought of being stuck with one operator with a high montly cost scares me. I wanted a new phone earlier this fall, though it didnt end up being an iphone, couldnt afford it:( I did buy it unlocked. and the reason for that is that is was actually a lot cheaper, but also because I too want to be able to use my phone abroad. This christmas I`ll be spending in Spain for almost 3 weeks, so I`m planning on buying a pre-paid sim-card, so that I can actually use the phone. this way I have a spanish phonenumber that I can use whenever I`m in spain. which I am quite often. Also, in Norway phones are reaaaaally expensive, an unlocked Iphone costs from 928$, and it isnt really any cheaper with a contract either. maybe you save 50-60$. I bought my unlocked Lumia 800 for 320$, and that was a one-day offer, and is considered super-cheap!! oh my how I`m blabbering here, I just find phone costs so damn expensive these days!

    luckily, we do have quite good cellphone carrier deals! I pay 35$/month which include 500 sms, 500 calling minutes and 500 MB, which I never going to be able to surmount!

  15. $35/mo for that plan is awesome I’m so jealous!!

    phone cost ARE too damn expensive. Blabber away!

  16. Those rates are ridiculous. For once, it makes me want to live in India!

  17. Interesting. Thanks for putting that math out there for me. Our current contract recently expired, so now we have to figure out what to do re: phone service. It’s nice to have more information.

  18. Unlocked iPhones do have great resale value, just don’t get sucked into the yearly upgrade cycle that many apple fans fall into. It’s better to keep the phone for a couple years to make your $850 investment worthwhile.

  19. Good Lord, even getting a phone these days requires hiring a CPA to figure out the best deal! TOO many choices.

  20. I pay close to $110 every month for unlimited voice/text to Canada/US with 6 gigs of data and I’m pretty happy with it.

  21. I’m shopping for a new phone and plan and buying an unlocked phone has a lot of appeal for me. I would rather pull out all my hair than sign another contract with a carrier.

  22. I just did (and wrote about) doing the same thing. It’s amazing how married people are to their subsidized phones and 2 year contracts. You may pay more for an unlocked phone up front, but in the long run it’s a much better option for all the reasons you laid out.

  23. Sorry, I disagree with the assessment.

    Reason 1 – You paid $850 for an unlocked iPhone 5 – yes you have no contract but if someone steals it you have nothing. Yes, you can cancel your plan with no fee but your still out $850. If you purchase a subsidized phone, every month you own the phone you’ll pay less to replace it. Month one you’d pay 36 x $20 – $720 to cancel the contract, month two you’d pay $700, month three $680, etc. At anytime you can sell your locked phone, you just won’t be able to sell it unlocked until you pay off the outstanding balance and a carrier unlock charge. Therefore – reason 1 is invalid.

    Reason 2 – Correct, an unlocked phone can basically be used with any carrier. However, besides an Apple product, all other cell phones can be easily unlocked for minimal cost with little to zero issues with warranty coverage. Even Apple phones can be jailbroken and unlocked with minimal effort and this would not effect warranty as the phone can be returned to stock (non-jailbroken/locked) with a quick recovery.

    Reason 3 – Agreed – there is the option of using an unlocked phone with a cheaper plan then with a subsidized phone. However, even you have admitted you have a $65 plan, so you paid full price for your phone and you’re paying full price for your plan. The big three cell providers have very few data, text and voice plans under $50 per month. If you were considering Wind, Mobilicity or similar carrier then a plan under $50 is possible. However, based on this you’d have been better of getting a Galaxy S3 from Wind with their $40 holiday plan which includes unlimited data, phone and text from any Wind zone.

    Reason 4 – I believe someone already corrected you that two year old iPhone 4 are not selling for $400 – $500. I sold my 16GB unlocked iPhone for $240 a couple months ago after I couldn’t sell it for $280 a month before the iPhone 5 was released. Basically, the $240 I got based on $20 per month for 12 months left on a contract would have equalled = $240 to cancel my contract. Fortunately, my carrier provided me a free upgrade and $100 additional subsidy as I threatened to move carriers if they couldn’t match their deal. iPhone 4s’s which are less then a year old only sell for $350 – $450, just because someone asks for $500 doesn’t mean they sell it for that. So basically, you are looking at a $400 depreciation value in your phones first year or $33 per month. So you current cell plan is basically $65 per month + $33 in phone deprecation or $98 per month.

    Therefore, there is absolutely no justification for budget conscious individuals to ever consider purchasing an Apple product, subsidized or otherwise. There are so many equivalent products available today for a significantly cheaper price. The iPhone is purely an expensive unnecessary luxury purchase.

  24. Monique Moreau says:

    Have you people not looked into Speakout? My girls got unlocked iphone 5 for Christmas. For $20/month, they get unlimited browsing and texting, perfect for teens. Forget $60/month with other carriers. And they don’t need an ipod anymore. Their “3 year contract” will cost them 36X20= 720 dollars, not 36X60=2160, savings of 1440 dollars, well less than the cost of the unlocked iphone 5. Speakout uses Rogers network, so coverage is not an issue.

  25. Why did you pay $850? You can get an unlocked i5 straight from Apple for $650. All you really need is data and a VoiP app. I got 5GB for $30 with a pre-paid T-Mobile sim.

  26. I have a family plan with AT&T under a two year contract. We’ve been with AT&T for about four years now and my two daughters have never upgraded their phones. Our contract will expire in August, but instead of getting a subsidized iPhone, my husband and I bought them unlocked 32 GB iPhones from Apple. They were each about $750. I figured this will save us from going into an expensive contract for another two years. Is this wise?

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