"Free" and "on us" flagships could cost users almost $2,000 more

How "free" are "free" phones from telcos? By the sound of it, the deals seem fine, but a Redditor says things are different in reality.

In fact, their calculations show a subscriber pays nearly $2,000 more in the so-called "free" flagship promos!

The thing is, savings advertised by major carriers largely evaporate once inflated service fees and bill credit restrictions are factored in.

The math behind the claims

A Reddit user ("ShadyPancake_69") examined the long-term cost of modern carrier upgrade programs and found that the shift from 24-month to 36-month agreements has quietly transformed phone financing into a form of high-interest lending. They claim such promotions are effectively structured to lock customers into multi-year plans with higher monthly service charges.

The comparison centered on the idea that carriers rely on two mechanisms to keep customers tied to their plans. The first is the liquidity trap, where a phone loses most of its resale value by the end of a 36-month cycle, leaving consumers with limited trade-in options outside the carrier. The second is the bill credit structure.

If a customer decides to switch carriers or cancel their service early – even halfway through the term – they immediately forfeit all remaining bill credits and become liable for the entire outstanding balance of the phone at full retail price. This penalty is often hundreds of dollars, making early departure prohibitively expensive.

The hidden cost

To illustrate the hidden cost, the analysis compared a two-line premium family plan (a requirement to access the best trade-in deals) against buying the same phones at full retail price and using a premium MVNO service.

For two $1,250 flagship phones over a three-year period, the big carrier option resulted in a total three-year spend of $6,260, driven primarily by $5,760 in mandatory service fees. The alternative, buying the phones outright for $2,500 and subscribing to a low-cost MVNO plan for $1,800 over three years, resulted in a total cost of only $4,300.

This comparison shows the big carrier option could cost the customer $1,960 more, even after the carrier "gave" them $2,000 in promotional credits. This extra $1,960 is enough to get you two more flagships.

You're hit with an effective 30% interest rate on the phone's financing, and any "free" streaming service they offer won't come close to closing the $1,400 cost gap. Don't worry about slow speeds either; many budget MVNOs now provide priority data that matches the quality of the big carriers' service.

The exceptions to the rule

The math can shift in favor of the postpaid carrier, though: when a customer falls into a specific "Goldilocks Zone".

This usually means a family has four or more phone lines and also gets big discounts they can add together, like special deals for military members, teachers, or first responders. With MVNOs, the price is simple – it's the same low rate per line, no matter how many you have. But the big carriers drop the price per line dramatically when you have a lot of lines, making the cost look less crazy.

For example, if a family with four lines adds a 25% discount for being a teacher or in the military, the difference in cost between the big carrier and the cheaper option gets much smaller. At that point, getting four "free" promotional phones might actually be a good deal.

However, for most people – those with just one to three lines, or those who don't qualify for special job discounts – the bigger lesson is obvious.