Wow, yeh. I just checked into this and it seems in the UK, on O2, we get a great deal - basically "free internet" data for a 18 months (then you can get a free upgrade).
Since the costs are the same
Not sure that's true, depending on your needs. The unsubsidized phone + lower monthly cost + phone bill would be much larger for me than the current contract I have.
Agreed, though, it would be nice to be able to pop in a foreign SIM when abroad (I actually have a SIM free bog standard phone for this exact reason)
You keep mentioning "free" upgrades. Do you just mean that you don't need to pay for the phone up front and instead (re)-sign an 18 or 24 month contract with minimum monthly payments? It's not really free, it's just like paying off your phone in installments. I saved money by paying more than the minimum necessary for my iPhone and paying a lower price each month than the minimum I'd pay to get the phone for "free". Even if it worked out cheaper in theory, you're locked into that price for 18 months. Now I'm out my contract my monthly cost is halved but the number of free minutes I got for that money quadrupled. I could get an even better deal if I switched carriers, but I can't be bothered.
I don’t know much about the price structure in the US but in Germany there are cheaper options if you buy just the SIM. That phone must be payed somehow, that’s why you pay more every month when you have a subsidized phone.
Now, that in itself wouldn’t be so bad, but your choices are seriously limited with a iPhone. What if I don’t need hundreds of minutes but want a real data flat rate? That’s not possible with an iPhone.
And you can’t just pop in some cheapo prepaid SIM when traveling, you are forced to shoulder the roaming costs. That’s maybe not so important in the US but seriously sucks in Europe.
Since the costs are the same – either higher monthly costs and a subsidized phone or lower monthly costs and a unsubsidized phone – I would always rather buy the unsubsidized phone.