I was thinking more like this... Currently, AT&T charges you $199 for an iPhone 5S, then has to cover $19 of subsidy over the 24 months of the $80/month contra

I was thinking more like this... Currently, AT&T charges you $199 for an iPhone 5S, then has to cover $19 of subsidy over the 24 months of the $80/month contract. A new carrier could charge $99 for an iPhone 5S, and make a huge splash. That would require another $4 of subsidy per month, but it would be pretty easy to just raise their plan to $85. Since they aren't just a retailer selling a single product once, it's much easier to move costs around. Similar to how a car dealer can play games with funding to make a car cost less but not really cost any profit.