According to the Cahner's In-Stat Group, the number of the world-wide wireless phone subscribers will soon reach the 1 billion mark. In the U.S. alone, the number of wireless subscribers is projected to grow by almost 17 million subscribers per year for the next five years. Contributing to the extensive growth are lower prices, larger geographic coverage, prepaid services, and Internet enabled phones. While the actual cost of a basic wireless phone is about $75, most wireless carriers offer their customers a "free" phone with a one-year wireless service agreement. Is this pricing strategy rational?