"This only happens if the consumer values up-front price over TCO."

Which many, many, many... do.

The world's largest retailer is Wal-mart for a reason (which has nothing to do with TCO and everything to do with up-front price of goods).

But consumers value up-front price over TCO. Why else would most people finance their phones with their plans instead of buying them directly?

Time utility of money. A lot of those financing plans are interest-free and surprisingly straightforward, and add up to the actual retail value of the device over the time of the plan, not one penny more. These proliferated as years-long contracts became unpopular.

In the case of Verizon, signing up with such a plan also allows you to return and upgrade your phone after it's halfway paid off.

With phones getting more and more ridiculously expensive, there's little reason not to do this unless you'd rather be out $1000+ immediately when you have the option to be out $40/month for a couple years with no downsides instead.

My guess is because that’s what they’re sold on and offered. Also perverse incentives come into play. With companies it’s quarterly results, with consumers it’s consumerism culture and the insane financing dependency people are hooked on.

Valuing up-front over TCO only makes sense for very large purchases and for business investments.