Google didn't even make any phones until much later. Instead they gave phone manufacturers the green light to do whatever they wanted. They ended up designing phones later because of how crappy the Android phone ecosystem had become. Google could have made Nexuses from the get-go.
The phone subsidies (in the US at least) are very reminiscent of the old leased phones of yore.
But if you look at the actions of mobile phone carriers and ISPs they're desperate not to become dumb pipes. They design all kinds of clever mechanisms and marketing strategies to distinguish themselves.
> Is there actually profit in providing more than that?
Well, in a free market, competition is intense. So if they can find ways to distort that, then yes: they will make more money. Many of us don't have much allegiance to particular gas station brands. But they create rewards programs to try and get some of that loyalty. Otherwise you just compete on price.
This is ten times better than what any provider offers today. If someone implements this, nobody will want to use old scheme anymore.
Also this should promote competition between carriers.