Actually T-Mobile started this sometime ago (probably last year sometime) and AT&T, Sprint and Verizon copied them. T-Mobile started it when they began moving away from subsidized plans. Essentially, the carriers realized that most consumers do not want to pay the full price of a device up front, as is the case in other countries, notably in Europe. The idea would be that you'd pay for the full price, but pay in installments. As a trade off, you would be able to upgrade earlier, anywhere from from 6-18 months into your installment agreement, depending on the carrier and the monthly payment you are making. From a business standpoint, it makes perfect sense.
With AT&T Next, they have a 12-month plan, that will essentially allow you to upgrade to the newest iPhone every year (or the newext Galaxy S, Galaxy Note, HTC One or whatever the latest version is of a particular device).
It is a money maker for the carriers, especially if you do the earlier upgrade, which requires trading in the device at the same time. You don't get to keep the device until you pay it off in full. They can in turn take that trade-in device, refurbish it and sell it -- on an installment plan, thus generating revenue from the same device, while you generate revenue on your new device.