Heh, previous comment I meant they want to recoup their $1000 which includes $300 costs and $700 sale of their service.
And on the mark-ups subject.
When you look at these deals, realising that you can't obtain the phone at a reasonable price (e.g. $300 in the example) then it makes a lot of sense to take the $1000, 2 year plan instead of spending $600 and having to make separate arrangements for connectivity.
The mobile phone business is a demonstration of price fixing at it's best. I'd much rather governments got involved in the massive disparity of prepaid vs contract phone prices, to redress the balance and provide a benefit to the public. It seems like governments are usually far more interested in protecting multinational corporations than their own citizens.
BTW, whether you buy a phone outright or receive it in a contract deal, it's your property. It isn't subject to finance nor is it rented or hired. At least that's how things are in the UK; the phone belongs to you.
Therefore, the only interest that the manufacturer and/or network retain is in their warranty obligations. Of course, they'll use any excuse (such as rooting/jailbreaking) to deny costly warranty services.
Disregarding the crazy markups for the moment. The original comment about unlocked phones being $600+ up front is simply untrue.
If I take a 24 month contract that eventually costs me $1000 and I get a phone that _retails_ at $600, that the network purchased for $300. The network only cares that I keep paying, so they can recoup their $700 in previously agreed line rental. They couldn't care less if I use the phone they provided or not.
I'm from the UK where many contract phones are already unlocked or networks are obliged to unlock them for a small fee (£15 - £20). The only reason they lock them in the first place is to discourage customers from defecting to other networks. We have no DMCA and no restrictions on unlocking, it can be done at any market stall or any high street shop for as little as £5 and we can still get all the newest phones, heavily subsidised on contract.
If your government panders to the networks' controlling desires then you'll find the networks abusing their privileges and imposing draconian rules. People will *think* availability of subsidised phones is dependant on strict controls but it's simply not true.