[alanctgardner2]

If you want to upgrade before the end of your term you typically pay back a prorated amount of your subsidy. So your free $600 iPhone costs $400 after one year, or $200 after two years. For a user who upgrades every 18-24 months, this device is almost cheaper than that fee by itself.

At least here in Canada, we also have a few niche players (WIND, Mobilicity) who differentiate themselves with slightly lower costs than the big three, but no subsidy on phones. In this case, I can buy a $300 Nexus 4 and switch, saving about ~$35 a month on my bill. My prorated subsidy from Telus is $14 a month, so I still save $21 a month over buying a subsidized phone. Even the iPhone, which is very heavily subsidized, doesn't cover the price differential between these carriers and the big three.

In conclusion: find a small, regional carrier that doesn't offer subsidies, save big money.