Because "free on contract" is just a US euphemism for "pay off in instalments".
It's a cunning ruse by the US carriers to get you onto expensive contracts, by pretending the low price you pay at the start for the handset is "subsidy" where in fact it's more correctly a "downpayment".
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In many other countries, there is far more transparency into what proportion of the contract is the handset payment, and what is the calls/text/data. And in the UK, a large percentage of contracts are SIM-only, ie. just the calls/text/data. Usually costing £10-15. And we buy the handset outright at the start, SIM-free. The total two year cost of this is usually less than going for the full contract and paying off the phone in instalments, since there is obviously going to be a charge for credit built into that payment plan.