The OP can easily pay to get the hardware fixed so that he can continue to use service. I don't see how the service contract is inexorably linked to the lifetime of the phone. It says that nowhere in the contract. And why is one part of the phone degrading over time different than another? It's all just phone hardware, and it goes bad.
How about because ALL batteries degrade over time? That's not a defect - it's just something that happens with the technology. However, if the battery life was cut by half in a year, I'd say you'd probably have a case, especially as the batteries are not replaceable. But that's an extreme example.
There's no reason why the ear speaker should break in five years as the long as the phone has been taken care of, let alone just one.
No, and most do. However, the warranty is 1 year unless you get applecare to extend it over the course of the contract.
The OP chose NOT to do that. It is his problem, not Apple's
I am really confused how this is hard to understand
You're not taking into account the Sale of Goods Act - which states that even if a product is out of warranty, you can argue that the product should have lasted longer than it did.