I was an engineer at Qualcomm and Kyocera Wireless in the late 90's and early 00's during the development of smartphones. Cell service providers, at that time, were planning to offer free smartphones and free service because they knew they could make a ton of money spying on their customers, peering into their bank transactions, selling data to advertisers, and providing geolocated ads based not only on the customer's current location, but also on their past spending habits. It was all made legal by laws written by the industry and handed over to Congress for passage.
Then, the industry figured out their customers were dumb enough to pay for the privilege of having their information sold and being inundated with ads. Is AT&T really in such bad shape that they would revert to the original plan to gain some customers.