The Field "Show Time As" is the "statuscode" field.
If you want to change the default when you create an appointment you need to add the following code in your onload event:
var formType = Xrm.Page.ui.getFormType();
if (formType == 1) {
Xrm.Page.getAttribute("statuscode").setValue(1);
}
note:
the status code for Free is 1, you can find more here