The exchange could be limited to only existing, paid plans. New plans would require a device compatible with the new specification. I don't think it's too hard since American phone carriers were able to offer free LTE devices to users with activated 3g devices.
Correct. You need an existing plan, and clearly the carrier can see what handset you are/were using. It's also the right thing to do because they are imposing a financial burden on people. People with older handsets are (I assume) likely the ones that can't afford newer ones.
