MVNO's are not being subsidized. They sub-lease the lines and still make money even at the much lower rates. The reality is that phones like the Nokia 520 are being offered for about $80 total. They certainly are not in the same league as the iPhone but they can call, text, allow use of several smartphone apps and can act as a very nice wi-fi hotspot for the iPad. It isn't as easy a transition but the nearly 700% savings probably will soften the blow.