You pay for the phone over 24 months but they “bundle” the cost of an additional line. You would pay for the cost of the line over 24 months but no one would call that “interest”. You could buy the phone outright and just use it over WiFi just like you can use a Peleton without the subscription. But, in both cases, it reduces the functionality of the product.
In fact, if people are making use of that option unusually often, economists get worried. Prior to a recession, consumers often feel more confident (and take on more financial obligations) than they have the resources to keep up with.
The equation has changed more recently as smartphone innovation has really slowed and very incremental. In either case you can just keep you phone for 18 mo and buy it outright.
I have a 128GB iPhone 6s from 2015 that my son is still using and will at least get the current version of iOS through September 2020. Phones have been “good enough” since the 2013 iPhone 5s.
People have been getting “free phones” with a contract at least since the mid 90s when I was selling them at Radio Shack.