There's not as much profit as you'd think. And a lot less than lower priced phones from other manufacturers. Plus, the carriers have to assume a ton of risk by agreeing to buy millions of iPhones whether they sell or not. Verizon had an estimated shorfall of $12-14 billion dollars as of July of iPhones they'd have to buy even though they didn't have the sales to warrant it. Not sure how that would up.
Currently, AT&T charges you $199 for an iPhone 5S, then has to cover $19 of subsidy over the 24 months of the $80/month contract.
A new carrier could charge $99 for an iPhone 5S, and make a huge splash. That would require another $4 of subsidy per month, but it would be pretty easy to just raise their plan to $85. Since they aren't just a retailer selling a single product once, it's much easier to move costs around. Similar to how a car dealer can play games with funding to make a car cost less but not really cost any profit.
