[LittleBreezes]

While it is true that selling handsets is not where carriers make their money, the perceived falacy is that they loose money by subsidizing handsets. The word subsidizing (which was popularized by the cell industry) suggests that they actually pay for a portion of your handset, again not true. For those of you that have worked in retail electronics you know that the retail markup is between forty and fifty percent. So when you buy a widget from the corner Big Bobs Electronics for $100, good old big Bob paid around $55 for that widget from his wholesaler. Now the whoesaler has a markup of around half of that. So Bob's wholesaler paid around $44 for that widget from the company that build the widget. Now since cell carriers are by far the largest retailers of handsets (in the U.S.) they can bypass a regional distributer/wholesaler and by directly from the handset manufacturers, at a wholesale or subwholesale price. So a handset with a retail cost of, lets say, $500 should have a wholesale (carrier) cost of around $200. The deal you make with the carriers, when you sign a contract, is that they pass along a large portion of that discount to you in return for you signing your life to them for a specified period; but they do not in any way pay for a portion of your handset. That is why I cringe when I hear the term subsidizing being used as it really implies the wrong thing.
Frankie