Who said anything about that - if you want a subsidised phone, you can sign up for it - the $200 phone won't magically disappear if they allowed people to purchase it outright and move it to another carrier. Have you even looked at the Vodafone pricing? For a 32GB 3GS:
http://www.vodafone.co.nz/iphone/32gb-iphone-3gs.jsp
Want to purchase the handset no strings attached? NZ$1379.00
Want it cheaper and on a contract?
24 Month contract, $130 per month, NZ$399.00
So you do have choice - do you want to buy it out or put it on a contract. I don't do contract, I do prepaid - there are a large number of people in New Zealand who have prepaid as well and don't want to miss out on the latest and greatest gadget by carriers who deem it 'only for contract customers'.
Contract:
http://www.telecom.co.nz/mobile/mobilebroadband/plansandpricing/monthly
Prepaid:
http://www.telecom.co.nz/mobile/mobilebroadband/plansandpricing/prepaid
It was never designed to replace fixed line - oh, and the so-called 'flat rate' plans in the US by mobile phone carriers is a load of bullcrap - how can you claim 'flat rate' then tag on the end '2GB'? Obviously if you're selling it in GB blocks it isn't flat rate!
In New Zealand there is: Telecom NZ, 2 Degrees, Vodafone and Telstra. For a population of 4 million - thats no half bad and better coverage than the horrid network that exists in the US right now - oh, and the carriers in NZ don't anal rape the the sender and receiver of phone calls and text messaging as they do in the US; in New Zealand only the sender pays for the calls - as it bloody well should be.