The provider subsidizes part of the phone cost and you pay it back over the 2 years of your contract. You still pay the full $649 for the phone you just only pay $199 up front and the rest is built in to your monthly bills. Why are you switching? I was contemplating going to Sprint from AT&T because it's cheaper plus they offer a credit union member discount but after finding out how slow it is in my area I nixed that idea. No LTE for sprint in the DC area for a while.