# Why most people opt for a subsidised phone in America?

I'll probably buy the next iPhone when it comes out(I live in Austria) and as I've done for my iPhone 3GS, iPhone 4 and 4S I was calculating which is better. Pay €679 for a new iPhone straight from Apple or go on a 2 year contract for a subsidised price.

Here is the thing. I've lived in Ireland, Italy and now Austria and in all these countries it is always better to pay the phone on your own and choose a pay as you go deal. But in America it seems that almost everybody chooses to go for a subsidised phone. At least it looks like this.

Why is that?

Here is a real example:

If I wanted to get an iPhone 5 right now in Austria going on a contract with the Orange network. The deal would be:

- iPhone 5 - €149.00

- 2 year contract

- Locked phone

- €40 monthly payment

- 4000 min, 4000 sms, 4GB Internet at 3G(after 4GB the speed drops to 21kb/s)

So if I make the math for 2 years the total cost is: €149 + (24 x €40) = €1109

Now a similar situation but without a contract on the same network:

- iPhone 5 - €679

- No contract. Change networks any time I want if I'm not happy

- Unlocked phone. Easier to sell

- €7.50 a month

- 1000 min, 1000 sms, 1GB Internet at 3G(after 1GB speed drops to 21kb/s)

So if I make the math for 2 years the total cost is: €679 + (24 x €7.50) = €859

You see. There is a €250 difference over a 2 year period, plus I don't have to stay with a network if I'm not happy with them, plus I've have an unlocked phone.

I understand that for someone who needs a lot of minutes and sms going on a contract might make sense. But with iMessage, facebook, viber, etc, etc.. plus the fact that almost everywhere I go there is a free hotspot a normal person can totally go through with 1000min, 1000 sms and 1GB Internet(3G).

What is the deal in America? Is it really a good choice to take a contract or am I missing something?