"reselling it in some other for a higher price."
Since cell phones are cheap and readily available all across the country, just where would these people be going to find some suckers to buy the cell phones at, say, twice the normal price??????
Your argument is illogical.
The same Alltel (among others) cell phones sold at Walmart for $49.95 (as pre-paid cell phones) are sold at Verizon's retail stores for $149.95. Plenty of people buy the $149.95 version from Verizon not knowing that they can convert the cheapo $49.95 version to a Verizon model by poking in a few numbers in the set-up. A few people make a lot of money converting these for people who are on a contract and have lost or have had stolen their original cell-phone and go to a Verizon retail store for replacement. Buy it at Walmart for $49.95 --> convert it, then sell it to one of those people for $75.00 --> profit. You make $50, and the person purchasing the phone saves $75 over buying it from Verizon.