Unlocked iPhone 5 Now Available In Apple Stores: Starting At $649

By Alexandra Burlacu | Dec 03, 2012 08:52 AM EST

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Apple has released the unlocked version of its new iPhone 5, making it available for sale without a contract on the company's Web site.

The unlocked iPhone 5 costs $649, $749, or $849 for the 16GB, 32GB, and 64GB models, respectively. The handset is available in the same black and white colors as the on-contract, subsidized models.

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The Cupertino giant did not mention when the retail stores will start carrying the unlocked models for sale, but early reports indicate the handset is beginning to reach inventories. The unlocked iPhone 5 models are GSM only, which means good news for AT&T and T-Mobile customers in the United States, but a potential drawback for Sprint and Verizon customers.

The subsidized iPhone 5 is available for purchase starting at $199 from AT&T, Sprint, and Verizon Wireless, or even less on a contract with a small regional carrier. The unlocked version starting at $649, however, comes with added freedom.

Unlocked handsets are excellent options for international travelers who use the device on GSM-based networks worldwide. Most countries usually get unlocked units right from the start, but the U.S. always has to wait a while after the iPhone launch to get unlocked versions, and that's thanks to the carriers.

The fact that the unlocked iPhone 5 model works on GSM, not CDMA networks, means that customers will not be able to use it on Sprint's or Verizon's network, hence the drawback mentioned earlier. Instead, the handset is limited to GSM networks, which in the U.S. means AT&T or T-Mobile USA. When it comes to connectivity, the unlocked handset can get LTE service from AT&T, but only 3G service from T-Mobile in a few markets.

Besides being able to roam free when traveling abroad, an unlocked handset also appeals to those who do not want to be tied to a contract for a couple of years. While the $199 price tag is considerably less than $649 for the unlocked versions, a two-year contract with a wireless network operator will add plenty of costs. Most post-paid carriers charge at least $70 per month for voice, text, and data packages, and two years means roughly $1,700 in carrier fees.

Getting a handset contract-free means that users can choose a month-to-month service that costs less. T-Mobile, for instance, offers a prepaid plan with unlimited 3G/4G data, unlimited messaging, and 100 voice minutes for a $30 monthly fee. Spanning over two years, T-Mobile's prepaid plan would amount to $720. Ultimately, it all comes down to whether users prefer to pay a larger sum up front, and less as they go, or pay a small amount at first, and catch up later in carrier expenses.

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