I will give T-Mobile some props here for their pricing model. The no-contract/no-phone monthly price is cheaper than the contract/subsidized-phone price. I think it was around $10 per month difference for the same plan which means that for a two year plan with a subsidized phone you are paying ~$240 more than if you buy the phone separately. Add to that the risk involved in signing a 2 year agreement (Will I change jobs and move to another town where the coverage is crappy on this carrier? Will my needs change in 6 months and I have to buy a different phone? Will I get laid off next year and still have to pay the monthly fee for a full plan?) and it is not necessarily such a great deal to get a discount on the phone.

But you are correct that it is not perceived this way by the consumer. If only there was some entity out there that represented the people directly, helped to educate them about what is in their interests, and had the authority to enforce some rules both protecting consumers and promoting actual competition in the marketplace. I wonder what that would be like. I won't hold my breath waiting for that, either.