They would still have the income from the sale of the device, plus the subscription for those who want "OK" messages. It also might give them more of an incentive to improve text messaging...maybe partner with Sirius for the downlink if they don't have coverage themselves.

The analogy is more like someone refusing to answer your call for help because you're broke. That used to happen with private fire departments, years ago, but now with or without insurance, you'll get help...ambulance too, if you need it.

A requirement to provide some sort of public service in exchange for the use of the public airwaves has precedent - public service announcements, civil defense and later emergency alert system for broadcasters, and enhanced 911 for cell phones.

I doubt if the $100 retail price of the unit (which means <$50 to the maker) covers the manufacturing costs. Spot are using the monthly fee to subsidize the cost of the unit in the same way as a cell phone.
I think Spot's business model was that a $100-150 initial purchase price and a $100/year subscription would get more market penetration than a traditional $800-1000 PLB and they would make the real money on add-on such as the $50 tracking service. Presumably as the technology advanced they would add more 'value-add' services like text messages etc.

There is a free public funded service, COSPAR, used by PLBs and ELTs and paid for by taxes from a bunch of countries.
This is more like the monthly monitoring fee for your home alarm system - it's not paying for the fire dept or police but it is paying for the operator to handle the alert and forward the call. (Or the ON-STAR system in cars)

The ACR Terrafix 406 PLB costs around $360.00 and the McMurdo Fastfind 210 PLB cost around $290.00. It is my understanding that these don't require subscriptions or service contracts only replacement batteries every couple of years. I'm wondering about your comments regarding the cost of such units being around $800 - $1000. Are these PLBs different from the ones your speaking of?

The McMurdo's price point is a real game changer. When SPOT was launched PLBs were typically out of the reach of the average public.

PLBs broadcast to the Cospas-Sarsat (sorry I wrote COSPAR earlier by mistake) satellites run by the USA/Eu/Russian governments - there is no charge for them.
Spot uses a commercial satellite phone system that they have to pay for.

The PLB satellites are more advanced in some ways, they are able to forward messages between each other, so if you broadcast a distress signal from the middle of the ocean it will reach base. SPOT can in theory transmit more complex messages, even voice calls if they wanted to fit the hardware, but the satellites are simple relays - the message is beamed down to a base station in the footprint of the same satellite. This means that their coverage in mid ocean or in the arctic isn't good.

Very low price PLBs might have a worse effect than SPOT. When they reach the price that every hiker and every car is fitted with them the system is going to grind under the strain - it was originally intended for ships/aircraft with professional crews and 'real' emergencies.

By having an operator, SPOT is able to do a little more triage on the message before alerting the authorities. Suppose SPOT were fitted to cars (like ON-STAR) so that a crash out of cell phone range could be detected. SPOT would be able to detect that eg. an airbag had deployed and inform local 911 rather than the PLB alerting the Coast Guard.

I'm not an apologist for SPOT - I personally would probably buy a McMurdo if I was going hiking in Alaska. But I don't think it's necessarily fair to think of them as only money grabbing opportunists.
If you regularly drive in winter in a remote area without cell phone coverage I can see the point of SPOT.

I love reading reports on SPOT and how poorly it performs and how it is not a real PLB etc etc... PLB can only do one thing and nothing else. SPOT can do multiple things and sort of PLB's job and it may not be the best solution but it works. People can nitpick over this and that but in the end it works. In case of power failure IF you have a second set of batteries it can be fixed not the same can be said about PLB (unless you carry McMurdo $599 with spare battery $175). That's one thing that regardless of the cost and other issues with the equipment would get me to lean towards Spot. Like orginally mentioned cost of equipment was so different that SPOT was just a smarter choice but now with the gap closing it is more of the harder choice. But SPOT is beating everyone with their functionality. Originally it gave a casual hiker an access to a poor mans PLB now it is evolving and trying to join big boys. I would say SPOT is not your granddads PLB...