Not discounted - subsidized. You pay a lower price in exchange for a locked in contract term.. whose price includes dollars to offset the upfront phone cost. But this is changing.. carriers are switching to models where they charge full price for the phone, in exchange for no contract and lower monthly fees. (This is the AT&T Next program in a nutshell). For the most part, all they are doing is moving the phone subsidy out of the monthly contract price.. and asking you to pay the full price of the phone, even if on an installment program.
Carriers are fighting the old contract lock-in and EFT arguments... so their answer is 'fine, no contract.. no subsidy... and we pitch it as if you can get a new phone every 2 years'. sure, you can BUY a new phone as often as you like