Currently, most mobile operators pay a subsidy to the manufacturer of cutting-edge handsets so they can turn around and offer it to you at a low price in exchange for locking you into a two-year contract.
T-Mobile
T-Mobile, though, will take a more European approach next year, where you just pay for the phone up front.
Why should you care? Basically, if you want to just pay for your phone up front, you can get dirt cheap voice, text and in some cases data plans. Or you can sign up to pay for it in installments, but it will still lower your bill.
T-Mobile has been testing this idea out in the U.S. as a “Value” plan for a while, and it’s popular: According to them, 80% of new customers sign up for the plan. It does, however, have a few substantial drawbacks.
The big one, to me, is that this is still a carrier-locked phone you’re buying, and you’re paying full retail price for it, and you’re still getting locked into a contract. If there’s a source of good phones at your average T-Mobile store, like Google’s Nexus 4, available that can easily be unlocked, then great. If not, this is ultimately just different lyrics to the same song and dance.
T-Mobile To Ditch Subsidies [GigaOm]