Who I have the same questioned this solution

With Your data plan the line fee is discounted to $15 per month of you are out of contract.

IF you use a 2 year contract you will end up paying almost $200 more for the phone over 2 years.

Example purchase

Full retail $649 plus sales tax

Device payment plan $649

Sales tax due up front

2 year contract for  Price

Upgrade fee $40

Discount phone price $199

Loss of discount for 24 months $600

- total $839