Why do you think they can't? Deutsche Telekom in Germany will happily sell you an iPhone 4 (16GB) for 1€ with a two year contract (90€/month for the first half,

Why do you think they can't? Deutsche Telekom in Germany will happily sell you an iPhone 4 (16GB) for 1€ with a two year contract (90€/month for the first half, 100€/month for the second half of the contract, unlimited minutes, 120 minutes in the EU, 3000 SMS, unlimited data throttled to GPRS speeds after 1GB). They are doing that whole activation fee scam and will want an additional 25€ from you but still, free iPhones are certainly a possibility and there is no reason to sell them for $200 together with a crazy expensive contract like, for example at&t does. I'm sure US carriers could sell free iPhones with contracts, they just don't want to. Not that it matters anyway. Who cares about the price of the phone when the contract costs by far the most money?