"Handset" is obfuscating legalese to refer to a cell phone in a way intending to distance the meaning of the word from the thing that the old and technologically illiterate people who rule on this use every day.

I'm no fan of their strategy, but cell phone providers have claimed for a long time that filling your phone with unremovable bloatware causes the overall price to decrease. Their argument is most likely that they will have to charge more once the propagators of that bloatware realize that they can no longer force it on people and wedge that as a reason to pay less to carriers.

The reality is that cell phones are priced based on what people will buy anyway and carriers pocket as much of the money as they can that third parties pay them for their bloatware. Ultimately because of that this ruling hurts their bottom line, but the above reasoning gives plausible deniability in the face of the law as it is interpreted by old technologically illiterate lawmakers