I think the point about carrier subsidised phones (at least in the UK) is that on a 'pay as you go' phone you pay for the phone and then pay for your calls. If you have to buy X amount of credit a month every month for 12 months and buy a phone you end up paying 12X+Y. If however there is a contract that costs X per month, including the phone, it totals 12X per year. It turns out cheaper and 90% of the time you get a better phone than you could afford otherwise.
It turns out cheaper and 90% of the time you get a better phone than you could afford otherwise.