So wait... because AT&T actively screws you over by never offering a cheaper plan, they are truly subsidizing your phone? That makes no sense. A subsidy on a phone is simply when the carrier offers to pay for a portion of your phone. Technically, it doesn't even require you to pay any extra! However, that would be a poor business decision, and the companies essentially bake in the costs (hence why our mobile costs are higher over here). Verizon and T-Mobile both offer ways to pay for a phone without the subsidy; however, T-Mobile's rate is a bit better given it's $20 less versus Verizon's $10 difference (between contract vs. prepaid).