Hack College writes: "The typical carrier strategy is to sell you a phone at a discounted price by signing you to a two-year service contract. You know how this works: Pay $200 upfront for a new iPhone, which retails for $650, and you’re locked into paying $90 or more per month for two years of service.
T-Mobile has opted to separate phone and service payments. The company has lowered upfront costs and created a two-year monthly payment system for phones. When a customer pays off their phone, their bill is lowered to reflect the change."