Make them pay for the phone service out of their own bank account. Teach them the value of money, make them earn what they want to spend.
Worked like a champ for me. My parents didn't have any money to spend on luxuries like cars and video games for us kids as we grew up, so if we wanted them we had to earn the money ourselves. It taught us an awful lot about life and how to not grow up to be professional victims like most of the US today.
If they want their phones, get them a bank account and have them open up their own cellphone accounts. Then add back incentives - for each "A" they get, drop $10/month into their account for the semester, A "B" gets $5, a "C" gets $2, a "D" or "F" gets nothing. Add in an overall GPA bonus. Or make the amounts whatever you think their schoolwork is worth. The point is that they get rewarded for WORK, not for whining about what every other kid has.
If they don't bother to put in work towards grades, they'll need to do work in other ways. The whole point of cash rewards for school grades is so they don't have to balance a job against schoolwork. They can get money by either blowing off school and getting a job, or by not getting a job and focusing on school. Either way, they get their $$$.
If they're just not very smart, then maybe enrolling in a vocational school would be best and skills acquisition like completing a certification course would earn them their reward.
The point is that they can get all the toys all the other kids have, but it sure as hell won't be free because nothing in life is free.
