Competitive because they cover most price ranges and is the price difference between it and locked models are negligible. For example the unlocked and somewhat more open Nexus flagship model is currently 500 EUR while the comparable Samsung model is 450 EUR. That's not a big difference.
I obiously don't count subsidized phones since they are just part of a payment plan, whether you see separate payments or it's just part of your monthly fee (in which case you lose badly if you don't catch the expiration date). You probably didn't really get your phone for $0. That's just parroting market speak where fees are called something else.
I would think the varying states of unlocked-ness is a bigger problem. Some have just unlocked bootloaders, which many manufacturers offer across the entire price spectrum (some HTC models, newer Sony-Ericssons etc.), and some go further. It takes a lot of customer empowerment to know which phone to get. That's where the community can help out.