Cell phone contracts

Why do I have to sign a contract to get cell phone service? Why do cell phone companies "subsidize" the phones?

Why can't I go out and buy whatever device I want and get service for it?

Well, I can... but only for the really high end phones and only on the GSM networks (AT&T and T-Mobile in these parts). Well, I guess there is a pretty healthy second-hand phone market for both GSM and CDMA (Verizon Wireless, Sprint, Altel, U.S. Cellular in these parts) if you're willing to risk eBay.

But why can't I just go find a $50 handset with a decent (but not over-inflated) feature set and get it up and running with whoever I want, so long as the tech is compatible with who I would choose as a provider?

There are a couple reasons that I'm complaining about this:
1. My phone is broken. It can't send picture messages (it crashes upon attempting to add a picture to a message) and it has a rather large crack in the outside housing. Beyond this, it's just a crappy phone. The interface is clunky, the volume is rarely good and it likes to chop up the audio even though there is sufficent signal strenght.

2. I want a new iPhone. But, according to the word on the street, as an existing AT&T customer, I'll have to pay "full retail price" for the new iPhone. They haven't said how much that will be...

There needs to be a healthy market for handset competition. Perhaps if this were true, we'd start getting some decent handsets at decent prices. Right now, the "retail" value of these things are over-inflated because the carriers use them as a ball and chain to keep you on their network. They can justify their two-year contracts as "payback periods" for subsidizing the cost of the cost-inflated phones.

Perhaps with some good competition we'll see some attention paid to the quality of the user experience: both in the effectiveness as a device and the usability of the features.