Unlocked phones vs. contract phones: Everything you need

Unlocked phones vs. contract phones: Everything you need

We answer every conceivable question you could have (or at least every question we could think of) about choosing an unlocked phone versus a contract one.

You’ve picked out the phone you want to buy, but the decision-making process is far from over. Should you buy it unlocked or from a carrier? Turns out, cost-wise it doesn’t matter. You could finance a new phone or pay the full price outright, but what’s the better deal? Would you believe (depending on your credit) both are exactly the same price? These are some of the questions you don’t think about until you are forced to. But don’t worry, we’ll answer all of them. Or at least all of the ones we could think of.

What are the different ways I can buy a new phone?

There are three ways:

  • Directly from the phone maker like Apple, Google, Samsung, etc.
  • Through a phone carrier like AT&T, Sprint, Verizon, T-Mobile, etc.
  • From a third-party retailer like Industrial One.

Phone makers and retailers sell both unlocked phones and locked carrier phones. For example, Apple sells an unlocked version of its iPhone 7 (USD575.99), but it also sells models that are tied to AT&T, Sprint, T-Mobile or Verizon. Best Buy sells an unlocked version of the Samsung Galaxy S7 as well as a locked version for different carriers.

What’s an unlocked phone?

Unlocked phones have several advantages over phones that are not. | Josh Miller/CNET

An unlocked phone is not tied to a specific phone carrier and can be used on any carrier you choose. That means:

• You don’t have to sign a carrier contract when you buy the phone

• You have more models of phones to choose from than what the carriers offer

• When traveling, you can easily use international SIM cards

• You can switch carriers without penalty

• Since it’s unlocked, it’ll have a higher resale value

The caveat is that you might not get every network feature, like Wi-Fi calling or HD voice, and the carrier won’t guarantee that the voice or data network will work perfectly on your phone. In other words, you’re on your own.

How is that different to buying a locked phone direct from a retailer?

The short answer is software. Phones tied to a specific carrier are locked by carrier software. An unlocked phone doesn’t have that software.

But don’t fret, the Unlocking Consumer Choice and Wireless Competition Act lets you unlock your carrier phone once you’ve paid for it fully and finished any contracts or agreements.

What’s the difference between an unlocked phone and a universal model?

An unlocked phone is a phone that is not tied to any specific carrier, while a universal phone is not tied to any specific network.

In many cases, phones are both unlocked and universal.

Smartphones are designed to work on either GSM or CDMA phone networks — think AM versus FM radio. Here in the US for example, AT&T and T-Mobile are GSM networks while Sprint and Verizon use CDMA. A universal phone can be used on any of those networks.

For years, unlocked phones were almost exclusively GSM. But recently, more smartphones are universal, like the iPhone 7, Google Pixel (USD68.44) and Moto G4 (USD299.00). When in doubt, always check with the phone manufacturer or your carrier for compatibility.

Is it cheaper to buy a phone from my carrier or the phone maker?

You can buy an AGM X2 from Industrial One for same price as other locked phones, plus you will get the dual sim option

It actually costs the same. For example, a brand new 32GB iPhone 7 was USD649 (at it’s time) from both Apple and the carriers. Obviously, this doesn’t include sales or promotions.

Are all phone models sold through both phone makers and carriers?

No. Some brands, like AGM and Conquest, sell phones only from their websites or through Authorized retailers like Industrial One, that provide you with after sales service. While you can buy the Moto Z from Verizon, the Moto G4 is only sold online.

It’s the same deal with Google’s Pixel or Pixel XL. If you want to buy it directly from a carrier, you have one choice: Verizon. But Google’s online store also sells an unlocked version which works on AT&T, Sprint, T-Mobile and Verizon.

The big advantage here is that buying an unlocked model from a phone maker gives you access to a larger variety of phone models compared to the smaller selection of handsets that carriers typically offer.

If I buy a phone unlocked, can I really use it on any carrier?

Yes and no. For example, if you buy a Google Pixel directly from Google, it is unlocked and can be used on any major carrier simply by putting a SIM card in it. However, if you bought a OnePlus 3T directly from OnePlus, it too is unlocked, but can only be used on GSM networks like AT&T and T-Mobile in the US — it won’t support Sprint or Verizon’s network bands.

The four major carriers each have Bring Your Own Phone (BYOP) pages where you can double check the device you want to use on a carrier. Going back to that OnePlus 3T, when I checked its credentials on Verizon’s BYOP page, it let me know that the 3T was not compatible with its network.

Please note: AGM X2 in Unlocked and Universal phone that can work worldwide on all available networks, other smartphones we sell, can use 99.9% of all Canada networks, in some cases excluding LTE on networks like Videotron.

So if I buy a phone online and bring it to my carrier, it really costs the same as just buying it from a carrier directly?

It really does.

What if I can’t afford the full cost of the phone up front?

Many people prefer to finance a new phone instead of paying full price for it up front. Phone makers and phone carriers offer promotional credit plans to cover the price of your phone. Keep in mind, this financing is in addition to what you pay monthly to a phone carrier for a data plan.

Does financing cost more in the long run?

That depends on your credit. Phone makers and major carriers offer promotional credit financing at 0 percent interest (usually over 24 months). Obviously if your credit is not great, your interest rate will be higher and in turn you will pay more for your phone. It’s also worth noting that some of these credit offers will have you pay a cash deposit in addition to financing the cost of your phone — again this is all dependent on your credit history.

What if I sign up for a plan like Apple’s iPhone Upgrade Plan?

The iPhone Upgrade Plan is a great option for those wanting both an iPhone and AppleCare+. A 32GB iPhone 7 (USD649) and AppleCare+ (USD129) will cost you USD778. The Upgrade Plan offers 24-month financing for USD32/month (USD778 over two years).

Apple will let you upgrade to a new iPhone as early as six months — you just have to pay off half of the phone’s cost and trade it back into Apple.

Keep in mind, the phone is unlocked but must be activated in an Apple Store on one for the four major carriers. Also the finance payment you’re making to Apple is in addition to the cost of a monthly data plan. AppleCare+ has additional charges if you actually end up using it: a USD29 fee for screen damage and a USD99 fee for other damage.

What’s this activation fee carriers want to charge me?

All of the carriers (except T-Mobile) charge you a one-time fee for activating a new phone or other device on their network. AT&T charges $25, Verizon and Sprint $30. T-Mobile doesn’t have an activation fee, though the carrier does charge $20 for a SIM card kit.

How am I going to remember all this?

The good news is you don’t have to. If there’s one take away it’s there are no financial advantages buying a phone from a manufacturer or from a carrier — locked or unlocked. However, going the unlocked route gives you a higher number of phone models to choose from, phones that carriers don’t usually offer.

Source: CNET