I'm running the AT&T plan for my family right now and the math worked out such that we would pay almost the exact same amount whether we bought a new iPhone up front or bought it subsidized with a 2 year contract (because of the monthly price difference between Bring Your Own Phone and a subsidized phone).

So I'm not seeing how this is much different for the customer, except that it's more straightforward to understand the pricing model (buy phone up front vs. paying in monthly installments).