In theory, a customer has paid back their subsidy after two years (assuming the normal two-year contract often seen with cell phones). Too bad they won't drop the monthly price at that point by whatever monthly amount they have been allocating to that subsidy. Even if they based that amount off of their internal number rather than the inflated retail number.
Churn is low so they can. Vast majority of people either keep buying new gear and extending contract or keep paying same off-contract.
The pay-as-you-go thing makes me scratch my head. Not sure why it exists. Must be some relatively small amount of incremental revenue that they see as lost without it. I suppose the incremental cost is nothing. I, for one, will take advantage.
If this wasn't the case then service would cost a lot more I suppose.
When all the smoke and mirrors clear big companies are after a certain net income vs revenue and they will get it one way or another. Since they all do it essentially the same, one has to wonder why they can't just be straightforward with the cost of service and get rid of all the games.
It's quite refreshing to buy some products - Apple, Weber grills, etc - where there is a price and essentially one price anywhere you buy. You know exactly what you are getting and how much it costs. You don't have to deal with these slimy business practices that are meant to obfuscate.