It's a little late to answer your post, but here goes:
As a free-to-play SWToR noob, I can say I can't really compete with pay-to-play or veteran players who have characters at the same level as me. It might be free, but it's like I'm only playing a dim shadow of the game. They made sure to monetize certain aspects of the game which are open and complimentary to old subscribers, in order to give an advantage to people who actually threw money into this game. Other things like the new story arcs and various races are only available to paying users.
All in all this serves to increase traffic in the game, but also make new clients without disadvantaging old clients. Lot's of people eventually end up throwing money into the game either way to get a glimpse of the experience.