Brian Barrett:

Remember carrier contracts? Those were the days! Or the years, rather; it’s the only thing most cellular customers in the US ever knew. It was an imperfect system, but it worked well enough before anyone really knew what a data plan or smartphones was, much less what they should cost. It didn’t hurt that the only real carrier options, in much of the country, were AT&T or Verizon.
 They offered a simple deal: We’ll subsidize the price of your phone, as long as you stick with us for two years. (Think that was bad? Many Canadian cellular contracts lasted three years until new regulations forced carriers to phase it out last spring.) This is the magic that kept very few people from ever paying more than $200 for an iPhone with a retail price three times that.