It varies country to country. That was the norm for Spain but has since changed, now you get two contracts, one for the service and another for the phone financing.
I pay 25/mo for my iPhone plus an 8/mo data plan. I don't do much calls but they're 8/c minute IIRC. I can move from a plan to another or cancel the data but the 25/mo will stay there until the phone it's paid.
It was 50€ cheaper to buy it this way than to pay full retail price.
1) There is some "lock-in" even without lock-in - some phone subsidies work even if people can leave because they don't leave that much anyways; think of it as advertising expense for customer acquisition.
2) There are economies of scale (order size) and synergies (sell phones at the same office you already have for contract sales) that can mean that $RANDOM_TELECOMPANY has significantly lower costs than $RANDOM_PHONE_RETAILER and can simply outcompete them on price.
>There is some "lock-in" even without lock-in - some phone subsidies work even if people can leave because they don't leave that much anyways; think of it as advertising expense for customer acquisition.
Yes. Carriers in the US lose, literally, billions of dollars on the iPhone because they've calculated the cost of acquiring a customer is a few hundred bucks, on average, so if subsidizing a phone buys you customers it's worth it.
Personally, I think they've gone overboard, but then again I'm not in the front office.
I pay 25/mo for my iPhone plus an 8/mo data plan. I don't do much calls but they're 8/c minute IIRC. I can move from a plan to another or cancel the data but the 25/mo will stay there until the phone it's paid.
It was 50€ cheaper to buy it this way than to pay full retail price.