T-Mobile U.S.A. is finally getting Apple's iPhone

March 26, 2013: 12:10 PM ET

The U.S.'s fourth largest carrier will sell the devices contract-free -- sort of

Backdrop for T-Mobile's press event. Photo: Lori Grunin/CNET

Backdrop for T-Mobile's press event. Photo: Lori Grunin/CNET

FORTUNE -- Six years after Steve Jobs unveiled the iPhone, Deutsche Telekom's U.S. subsidiary -- T-Mobile U.S.A. -- announced Tuesday that it has finally cut a deal to carry Apple's (AAPL) line of smartphones, starting April 12.

To differentiate itself from AT&T (T), Verizon (VZ) and Sprint (S) -- which all require customers to sign a two-year contract -- T-Mobile will be selling the iPhone 5 for $99.99 (plus a two-year $20 monthly surcharge) in a schedule of pay-as-you-go deals that start at $50 a month for unlimited calls and 500 megabytes of data.

T-Mobile's price for an iPhone 5 is about $70 cheaper than the $649 price for a model without carrier support. The iPhone 5 starts at $199 with a two-year contract at other major U.S. carriers.

But as reporters at the event were quick to point out, the two-year, $20 per month surcharge is a kind of contract. The phones cannot be unlocked and used on another carrier's network until they are paid off.

T-Mobile also announced the launch of its high-speed LTE network in seven metropolitan areas: Baltimore; Houston; Kansas City; Las Vegas; Phoenix; San Jose, Calif.; and Washington, D.C.

The theme of the event, held in a downtown Manhattan gallery, was cell-phone purgatory -- a reference to the restrictive contracts by which T-Mobile's competitors keep their customers trapped for up to two years. "This is bullshit," said T-Mobile CEO John Legere, who livened up the press conference by cursing like a sailor.

The deal will expand Apple's potential market in the U.S. by more than 33 million subscribers, a number that could grow to roughly 42 million if shareholders approve T-Mobile's proposed merger with MetroPCS.

T-Mobile's business wire release and media release.

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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