reply to jc100
Re: Good idea.. If more carriers did this upside here would be, at least for the iPhone since prices for them used is so high, that if a deal on better service comes along you can just sell your old phone and pay off what you owe on it and move to the next service offering the better deal. The contract system we use now makes service and device price competition less likely. Moving to a model like this with the cost of service plus a zero interest loan on the device makes it more likely for price competition of devices and service.
It doesn't look like it got reported here on BBR but Walmart's SimpleTalk is going to be doing something similar. They are going to offer the iPhone on a no interest loan and their $45 dollar a month unlimited everything plan. What makes SimpleTalk somewhat more exciting is they are an MVNO on AT&T's network.
One more thing I'd point out. that calculation you did was based on paying nothing for the phone upfront. Paying even $50 dollars is going to lower that monthly fee somewhat. Plus, if you come in to some extra money during the term of the loan you can pay more and lower the monthly cost of the remainder of the loan term. Even with nothing down an iPhone 5 or top end Android phone for free up front and $70 a month with unlimited everything and no contract is a pretty good deal if you ask me. With AT&T or Verizon you're paying $199 up front, $90 a month with a paltry data allowance AND you're locked in to a two year contract.