They are putting you in a contract, without saying your in a contract. You still got to pay $25 a month for each phone. If you want to leave T-Mobile before you pay of that $650 (16GB) phone, guess what? T-Mobile will charge you for the difference. At $25 a month, it'll take 26 months to pay off that phone. Gee, that's a contract because I'm still "trapped" by a carrier until I pay off the phone. It's the same as paying AT&T $199 for 2 years and deciding to leave before that and the hit me with an ETF of $450 - the $650 the iPhone costs!
T-Mobile is just playing word games.
The difference is after you pay off the loan they gave you to buy the phone for no money down......your bill goes down! After the same amount of time on AT&T your bill will still be the same. Plus at anytime you can pay the loan amount off and have your bill go down. Plus you get a cheaper plan and unlimited data.