[chimeracoder]

Actually, the way it works in the US ends up being a lose-lose situation for consumers. Phone prices tend to be lower, but at a cost of an increased contract price. Over the course of a two-year contract, people will pay more than the cost of the subsidy of the phone.

The only way to beat this is to buy phones out of pocket and get a plan that doesn't require a contract. However, you'll still lose out on flexibility, because the companies in the US use incompatible technologies.

Fun fact: the incompatible technologies were originally conceived of as a way to increase competition between phone companies. Guess what effect they actually had!