2 year mobile phone contracts- why?

Remember the days when we could get any phone on a 12 month contract, then came the 18 month contracts which were annoying but we stuck with them. But now, have the tariff providers taken it too far with these 2 year mobile phone contracts? Well there are a few things to consider, because the mobile phone providers have been raking in the money for these contracts, or have they? Vodafone lost 159000 customers last year and are desperate to keep them in any way, so, if they are tied in for 2 years, it is plain sailing for them. But the thing is, these contracts can prove to be costly for high end smartphones of the moment, which everyone wants. Unfortunately, very few of the smartphones are available on PAYG, with the exception of the iPhone. Let's take it as an example. The cheapest iPhone contract for the 16GB model involves you paying £184.98 for the phone, and signing up for 2 years on o2, resulting in £890.10 for 2 years of an iPhone. But if you go for the iPhone on PAYG, it is £440 for the 16GB, and even though you are stuck on a confusing o2 PAYG scheme, it is cheaper to do this than the enormous contract. And you are free to leave after 12 months, it means stumping up the cash early on, but if you can do that, then the world is yours.