Because some people can't "afford" the price of the unsubsidized Nexus 5 next to a "$199" (on contract) S5. Some people like better cameras, some people prefer the S5 hardware, etc etc.

If you can't afford an off-contract phone, you really can't afford an on-contract phone. You just don't know it yet ... ;-)

It's not that different than contracting a mortgage of asking for a lease to pay a car...

Maybe it's not a matter of "affording" the same way most people cannot afford to pay for a house on the spot, but I can understand that some people prefer to pay ultimately more money, but a much smaller sum over time.

If your credit is good enough for a phone contract it's probably also good enough for a credit card that could buy the phone outright.

it's too much thinking to realize that

Isn't it more about the instant gratification part of the whole deal? People usually think it's easier/better/nicer to receive what they want and pay over time rather than to save the money and buy it at a later date. Or am I just wrong?

in Albania people buy a 700$ phone when they have a salary of 300$/month so i don't know what to believe anymore

So, AT&T/Verizon sell subsidized locked phones and get their money back on the long run.

If I wanted to, in the US, could I get a contract with a lower value because I'm not buying this subsidy? If so, wouldn't the right move would be to do so and buy an unlocked phone? I'm guessing AT&T/Verizon's interest is far larger than banks', leading to a better deal, even if you don't have the money right now.

On the other hand, locking my phone is the wrong way to enforce anything. It's my device to do what I want with.

T-Mobile goes down the route you are suggesting: Lower monthly charges if you BYOD with the option of going the traditional contract route. They even push this as a competitive advantage.

ATT and Verizon to my knowledge do not offer equal quality service as their contract plans at lower prices for BYOD customers.

ATT does. If you're using their Mobile Share / Next scheme, you get a discount on your plan if you're not on a contract. If you use Next, they're effectively financing your phone for 0% interest for 18 or 24 months. (My bill is $40 for 2GB, $40 for the phone, minus $15 for not being in a contract.)

On many carriers (including Verizon, the best here) you pay the same plan fee, or very close to it, whether you bring your device or not.

Some people are Verizon customers...

"the brand name"

In this case, it's a Verizon phone. Verizon (quite illegally, to my understanding) keeps most devices it doesn't sell itself off its network.

Sometimes just the hardware.

I have a Kindle Fire HDX from Nov.2013 sitting around waiting for an unlocked bootloader to run custom ROMs. Why not just get a Nexus tablet? Because I don't like the design of those; Kindle Fire HDX is much prettier IMHO.