Do realize that the cost of subsidizing your phone (making it cheap or even free) is factored into your monthly bill. In exchange for cheap phones, we get some of the most expensive plans in the world. The contract is 2-year with ETF because they lose that subsidy if you leave too early. That's also why retentions departments can offer such sweet deals for people calling in to cancel. Those customers have already paid that subsidy back (and more, in most cases) and so getting less per month from the customer doesn't really cut into their bottom line at all, especially if they can lock the customer into another 2-year agreement.
Personally, I'd prefer higher upfront costs and lower monthly bill. For me, phones last years until I drop them one time too many and no new phone has had a must-have feature for almost 10 years running. However, with the way US consumers don't think past the first bill (racking up massive personal debt in the process) I don't think the sales model is changing anytime soon.
Oh, and cell companies are raking in triple digit profit margins on text messages. It's not hard to subsidize part or all of a phone using the monthly text subscription alone. SMS is effectively free in terms of cost, so all those stories in years past of teens racking up $10k monthly text bills, well, let's just say it's a no-brainer for the company to forgive most or all of that. They hardly lose money, if any, and they get a good PR boost.
In case you're wondering, data isn't very far off.
