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I imagine people will have to start purchasing their phones outright. This will probably affect the lower class' purchasing power disproportionately, but personally, I don't see a problem with saving to buy rather than purchasing "on credit" so to say.
I think that would also see an eventual reduction in device costs eventually as more people will be unable to pay the premium costs of a flagship device. Or the mid tier devices will start selling more, androids popularity will probably rise too, matching the rest of the world
Certainly corporations will have to find a way to provide more affordable options until they can figure out another way to assure investors of the "infinite" wealth growth plan.
There are loads and loads of phones on eBay. You will quickly find sellers who do this as a business, not just some dude ditching his old phone.
They have consistent quality ratings (A, B, C, etc.) and pics of the product you will receive.
Bought my last 6 phones that way. No way I'd agree to a carrier provided, $800 phone.
I'm not purchasing expensive phones either, but I think it's important to note that this will probably have a significant affect on the industry (mostly in the US) and I'm not usually optimistic of how these changes affect the consumer in the long run.
We still have to live in the real world. Someone still has to make those new phones that you eventually hawk.