Sprint Nextel Corp's Virgin Mobile announced Wednesday that it would start selling contract-free versions of the Apple iPhone 4 and iPhone 4S with prepaid plans ranging from $30 to $50 a month, starting June 29.

The company said in a statement that there would be three monthly prepaid plans: $30 a month for 300 minutes of talk-time and unlimited data and texting, $40 a month for 1,200 minutes of voice and unlimited data and texting and $50 a month for unlimited everything. While the iPhone 4S (16GB model) will cost $649, the iPhone 4 with 8GB memory will be priced at $549.

Until recently, the iPhone has been restricted to contract-based plans only. But now the handset is set to enter the no-contract prepaid market. However, the much higher upfront cost of the phone could be a problem. Virgin Mobile charges for other smartphones are as little as $80, the Associated Press reported.

Whatever it may be, the latest move by Sprint does push the iPhone deeper into the prepaid market as another pay-as-you-go carrier Leap Wireless International Inc announced last week that it would offer the phone on June 22, with prices starting at $400 and $55 per month.

Virgin Mobile customers will also be able to use their iPhone as a mobile hotspot for an extra $15 per month, providing Internet access to nearby devices.

Prepaid iPhone, A Good Deal

A comparison between buying an iPhone 4S on Virgin Mobile for two years and buying the same on Verizon Wireless would show you how much you can save if you go for the prepaid plan.

You'll have to pay $649 for the iPhone 4S on Virgin Mobile and with the monthly service of 300 voice minutes, unlimited texting and up to 2.5 GB of data for $30, the total cost for two years would be $1,369.

On the other hand, you have to pay only $200 for the iPhone 4S on Verizon Wireless, but with the monthly service of 450 voice minutes, unlimited texting and up to 2GB of data, the total cost for two years would be $2,360. Thus, even after paying $449 more for the same handset on Virgin Mobile, you can actually save almost $1,000 over a period of two years.

You can save more money even with your family plan by using Virgin Mobile's prepaid service, when compared with a subsidized iPhone from Verizon. On Verizon's family plan, the monthly service cost per person for a family of three is $73. Compared to the carrier's individual plan, this is a savings of $17 a month for one person.

But if you go with Virgin Mobile's prepaid plan, you can save $43 more per month. A breakdown for the cost of Verizon's family plan, courtesy of CNET, gives a clearer picture:

  • $90 for 1400 voice minutes
  • $10 for one additional line (The first two lines on the plan are free.)
  • $30 for unlimited family text messaging
  • $90 for 3 lines of data
  • Total: $220 per month or $73 per person.

After two years, the total cost would be $1,952 for a Verizon iPhone 4S, still more than $1,369 for the same period of time on Virgin Mobile.