AT&T vs. iPhone unlockers

Posted by: Stephen Wildstrom on August 26, 2007

It appears that A&T is making threatening noises in direction of folks who have been developing software that will let an iPhone be used without AT&T activation. AT&T ought to chill out instead.

Since the company says it is not subsidizing the price of the iPhone, it’s not like would-be unlockers are going to take the subsidy and run, which is a wireless operator’s main reason for wanting to block unlocking. A U.S. owner of an unlocked iPhone only has two choices, neither of them terribly appealing. One is to use only Wi-Fi wireless, but I’m not sure I get the point of an iPhone that isn’t a phone. The other is the use it on the T-Mobile network, which doesn’t confer any particular advantage, unless you happen to be in one of the few area’s where T-Mo’s service is better than AT&T’s.

The real demand for unlocked phones is coming from the 90% of the world where you cannot use an AT&T iPhone without paying extravagant roaming charges. And what skin is it off AT&T’s back if someone wants to use an iPhone on the Vodafone or Orange network?

Meanwhile, the folks who are bit by bit unraveling the mysteries of the iPhone that Apple and AT&T have tried so hard to keep secret are doing everyone a favor. The iPhone is a revolutionary device, but the desire of Apple and AT&T to keep it within a garden with very high walls is a huge step backward—and one that increasingly looks doomed to failure.

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Reader Comments

Blog Reader

August 26, 2007 10:08 PM

Insane. What skin is it off ATT's back?
They lost a customer.
And you should check the facts, Apple gets a cut from ATT for each subscriber.
There's no reason ATT or Apple should want this.

Steve Wildstrom

August 27, 2007 08:09 AM

@Blog Reader
Apple gets a share of AT&T's monthly revenues, which is very different from subsidizing the upfront cost of the phone. If the availability of unlocked phones increases the total market by reaching customers who cannot or will not use AT&T service, Apple is better off and AT&T is no worse off.

iang

August 28, 2007 02:15 AM

Can someone explain why it is "revelutionary"? Is it just bacause it is from Apple, becasue all it's functions seem to be available on other phones, at lower costs etc. I am all for innovation but Marketing sucks.

iang

August 28, 2007 02:20 AM

missing features in the iPhone:

voice dialing, voice recording, instant messaging, a memory card slot, MMS, tethering, A2DP, common Bluetooth file transfer (OBEX), GPS capability, copy and paste, native games, and support for MP3 files as ringtones.

Revelutionary only in the world of MAC heads.

Rob Conary

August 28, 2007 02:55 AM

I'm going to have to agree with Steve and the author. The people that are buying Iphones and then proceeding to unlock them are a different group of consumers then ATT could have even hoped for. These are people that either can not or will not use the ATT network, and who go through the trouble of finding a n individual or group of individuals that know how to unlock the phone. I am guessing your average consumer would have no idea how to even go about that nor would they care. The average consumers are going to be the majority of Iphone sales and really the only people ATT could even count on receiving business from. For ATT to consider the idea that they need to target and prevent this group from buying and unlocking phones with lawsuits is just another example of corporate greed.

Mickey

August 28, 2007 03:07 AM

I will never do business with AT&T again since they give everything to big brother (see pbs bill moyers journal) I don't care how much I'd like to get an iPhone

Hi Mum

August 28, 2007 03:07 AM

One of the few area's where T-Mo's service is better than AT&T's is Chicago. The country's third largest market.

Jpeezy

August 28, 2007 03:15 AM

This is classic Apple business practices in action. They won't let their Mac OS run on any computer except the ones made by Apple, they lock up iPods so you have to use iTunes with them and you can't just put MP3's on them like any other player, and they lock up songs you buy from the iTunes store with DRM so they are crippled compared to free MP3 downloads.

It's great that soem kids have figured out how to unlock the iPhones, but it will be better when more sensible companies make and sell competing phones that are not locked up.

shay

August 28, 2007 03:34 AM

the main reason I see for AT&T wanting to keep the iphone locked is to guarantee locking customers into 2 year contracts for as long as they can ride the iphone hype (which by the looks of things could be quite a while). Apple on the other hand would LOVE to have the iphone unlocked and distributed to anyone who wanted one, after all they would still be getting full price for all iphones sold. Just look at how they wanted* to have DRM removed from all MP3's and less restrictions.

Jay Carr

August 28, 2007 04:05 AM

Folks, what the author is saying is that the only people who want an unlocked phone are not in at&t's service areas. Vodaphone and Orange are both in Europe (shame on you Stephan for not being more clear!)

In reality the author is right, it really doesn't effect AT&T. Apple, on the other hand, might want to hurry up and cement deals with European and Asian carriers. I'm sure most people would rather buy a fully functioning phone anyway (visual voice mail won't work with anyone but AT&T right now).

ogman

August 28, 2007 05:05 AM

T-Mobile customer service instead of AT&T's? The hackers are heroes! Seriously, I'd pay them for allowing me to escape the arrogance and apathy that is AT&T's customer support.

jc

August 28, 2007 05:17 AM

Apple is the big loser here. They should have anticpated this and rushed the iPhone to the world market. If unlocked iPhones get popular they can either clamp down and risk some really really bad press, or they can just hurry the hell up and get it to the world (non-US) market.

Sure they'll sell more phones, but the real money they are after is the exclusivity deals with European carriers. The competition is extremely high, and carriers are willing to pay ridiculous sums to Apple to get exclusivity on the iPhone.

Darran Clements

August 28, 2007 05:25 AM

This isn't the first time that Apple have tried to restrict "openness" in their products is it? It is hardly a major surprise, though I would have thought they would have learned a lesson or two from a certain batle with Microsoft all those years ago. Maybe AT&T believe their main market for the iPhone is in businessmen roaming in Europe and Asia? (Irony/sarcasm intended)

nanda K. Menon

August 28, 2007 05:29 AM

apple can make a lot more if it is sold in the international market as an open phone

Pero Cukalo

August 28, 2007 06:03 AM

You write: "One is to use only Wi-Fi wireless...The other is the use it on the T-Mobile network.."
My comment is: IT IS WORTH UNLOCKING IT in EUROPE where T-Mobile is one of the major leading mobile networks, and it is cool to own and speak over iPhone in the streets of Berlin or Skopje.

Allen May

August 28, 2007 06:57 AM

The damned thing way over priced as it is.Apple and At&t need a wake up call anyway. And it might as well be on an iphone from any network but At&t.I'm
waiting till they come down to $50 and believe me they will.Thats one thing about this country $ run everything and it doesn't take that many of them
to make the econ dog drool! See Ya!

David Dunton

August 28, 2007 07:14 AM

To make "area" plural, you add an "s," not apostrophe "s."

change is good

August 28, 2007 07:19 AM

whether seen as good or bad, the hacking of technology is an inevitable aspect of life...the exclusivity rights of AT&T, regarding the iphone, are a joke...in the words of inner-city baltimore, 'that's what you get nigga - yeah!'...

Bill

August 28, 2007 08:04 AM

My last time as a customer, and believe me, thats last in capitol letters, with ATT left me as a permanent non-AT&T customer. It took contacting my state attorney generals' office before the issue was resolved...and it was their mistake, not mine. I will NEVER deal with AT&T again as a result. So, although I reside in the US, I am not going to be buying an I-phone...unless it can be used with a non-AT&T provider.

I'll be happy to support any anti-trust action against AT&T though.

Anthony

August 28, 2007 11:33 AM

The only thing I find interesting, is that no one is really asking what comes next? I mean if you can unlock an IPhone, why can't you unlock an IPod to run MP3's?

Citizen Me

August 28, 2007 12:55 PM

U.S. consumers have been robbed by cell-phone companies for years with hidden fees, locked phones, expensive fees if you want out of your contract because you're unhappy with the service and a lot of these phones have deleted features on request of the phone companies. It's time congress ends this practices which discourage competition, keeps prices high and inhibits technology progress.

Filho

August 28, 2007 12:59 PM

Even my 15 years old daughter who waited 1/2 a year to get the i-phone told me "IT IS A RIPOFF" !!! For the first time in my life I did not have to give excuses for not buying something for my 3 teenagers. Nice job APPLE !!! You made me happy ... and helped making other wonderful phones much cheaper.

Ian

August 28, 2007 01:11 PM

You write: "One is to use only Wi-Fi wireless...The other is the use it on the T-Mobile network.."
My comment is: IT IS WORTH UNLOCKING IT in EUROPE where T-Mobile is one of the major leading mobile networks, and it is cool to own and speak over iPhone in the streets of Berlin or Skopje.

He was talking about the US, where T-Mobile has cheaper rates but worse service than AT&T or Verizon.

RogerThat

August 28, 2007 01:14 PM

why would I want to buy this phone if I can't even replace the battery myself when it runs out? Apple should have been able to figure this one out because in China, they already beat them to it. Anybody heard of the iClone?

Shawn

August 28, 2007 01:15 PM

I agree. AT&T has awful, awful customer service. I wonder how much that is hurting the iPhone. There is a large army of anti-AT&T consumers out there.

Sherri

August 28, 2007 01:16 PM

Why would a company not want more sales? Why wouldn't Apple or AT&T want to open up sales of its flagship phone to other companies and go global? I think they will, of course they will. They're big companies who want to get bigger. The way to get bigger is to have the money to support getting bigger. Exactly. I imagine Apple has limited numbers of experts in its ranks that can understand its new device, and with patents pending, Apple's going to protect its technical wizardship from leaking to the other companies. They're not going to jeopardize their reputation for great technical support and release a phone globally when there's no gaurantee they can handle the volume of callers with technical problems. They're not going to hire a ton of new ppl & put their patents at risk. That's my gutt feeling, as a consumer and a long time science & tech stock holder / watcher.

Zesty

August 28, 2007 01:17 PM

software. No 3rd party compatibility issues. That is why using a Mac is a less maddening experience.

On the iPod, you can fill up your iPod with only mp3’s if you’d like – no restriction there. And if you DL some tunes from iTunes, burn them to disc and re-rip them to whatever format you want, DRM-free.

I’ll ignore the free downloads vs. "crippled" ones where you buy them legally.

Sounds like a typical Mac-basher and someone who hasn’t used the products they hate so much.

Scot

August 28, 2007 01:18 PM

Isn't it interesting that it's AT&T that is making the noise, and not Apple? After all, Apple gets 100% of the sales revenue from selling an iPhone, and AT&T only gets the money from the plan itself. If that's the case, why would Apple really care that much if the phone was unlocked?

Here is how I see it:

Apple wanted to get the phone out there, but needed a carrier. No one else would do the network requirements that the iPhone visual voicemail needed, except for AT&T, and then only for an exclusive agreement for 5 years. Apple wanted the phone out there, and so said yes.

So, the phone was announced, hype begins. Within weeks, people can activate the phone without getting a 2 year contract through AT&T, though they can't use the phone itself. Apple reported almost twice the number of phones sold as AT&T announced were activated. Isn't that interesting?

Now there are hackers out there unlocking the phone. You would think, since Apple has the first and foremost stake in the phone they would do something about it. But who is making the noise? AT&T.

Ultimately, I don't think Apple really cares about the cut in revenue from the accounts. Their business has always been heavy in their hardware. Personally, I think they are rather excited about the current situation, because it gives them a perfect market for, say, an Apple PDA with voice over IP software, and now an open development platform (which can then be utilized for the iPhone).

It just seems rather interesting if this is the direction they are going.

KeyboardCowboy

August 28, 2007 01:19 PM

I totally agree with iang and jpeezy. iPhone functionality is not only available on other phones (uh, my two year old BlackBerry?), it's way better.

Apple created what they always create, a user interface. It's nice, if you're into that, but it's nothing more than a new menu.

On the other hand, locking any phone to any service is ridiculous.

Phone SME

August 28, 2007 01:31 PM

I really don’t see what the benefit of using an iphone is considering that it has no business purpose yet and no memory expansion. Further more to the point is that Apple loves making it products proprietary and after 30 years of owning less than 12% of the market they still haven’t learned. The only people that want to own or unlock these phones are materialistic or crooks. Once unlocking becomes widely known people will start getting held up or shot for their phones a lot more often just as ipods caused a rash of burglaries.

JOe...

August 28, 2007 01:38 PM

just a comment to a post further up. iPod's do too handle MP3s - all you have to do is drag them to the iTunes app -or rip your CDs yourself in iTunes - it creates MP3s just fine. So, where do you get this idea that it doesn't handle them?

hmmmm... curious...

peace. JOe...

Paul

August 28, 2007 01:40 PM

Not just one area's, but two... Ooops, make that three :)

jma

August 28, 2007 01:43 PM

The 1st generation IPHONE will soon be taught as a marketing/product fiasco in business schools. A prime example of a product rushed to market without proper research and field testing. From a misdirected angle of allowing only one company to sell it when millions more who are happy with their service and do not want to change companies just to get the phone were instantly lost as a potential customer. I for example have had cingular and at&t and now have Verizon.. You couldn't give me the phone with their service. I never thought for one second of buying it because I would have had to change, A sentiment more repeated than not. Poor customer service, a laughable launch with more complaints than compliments, a product with a battery that will cost the company millions to settle and litigate. the poor bill managment research and environmental waste from generating mllions of pages for bills, that many of the Ipod features e that make the ipod unique and a step above eliminated on the iphone, same thing with many of the web and other computer features of apple that don't work on the IPhone. The fact that the IPHONE is also experiencing the highest return rate of any new cell phone launch ever is a testament to its inability to deliver. The next generation of IPhone may remedy this but how many customers are people are lost forever or were never given the chance because of the poor mangement decisions of the company in what could have been an amazing phone that would have taken over the business.

E

August 28, 2007 01:54 PM

Screw the i-Phone “Treos rock!” They are almost as real a PC as a Mac is a real PC.
And easer to use than Linux, Windows or a Mac

If Palm fixed a few things about its OS and made a real PC (The Folia does not count.) so help me God id consider replacing my PC with One.

Hire me Palm ill show you the way!

And before you go off on Palm please don’t bring up your old Treo 650 that you did not know how to operate. I’m sick of them stories from non tech savvy people who Have no clue. My advice to you all is to try a 755P. think of it as the dumb mans treo

Steve

August 28, 2007 01:56 PM

Come on, if you're Apple you want to make money, that's why you're in the game. You push it to the limits and hope you don't hit with an anti-trust. You'd all do the same if you could. Is it right to the consumer? Most of the times no, but that's the nature of business and that's what keep the markets moving. It will play itself out one way or another, and when it does we'll deal with that too. Eventually comporable phones will be on the market at much cheaper prices and it will no longer be an issue.

Jon

August 28, 2007 01:57 PM

Why should ATT 'chill out'?? ATT and Apple made a deal with each other for the iPhone to remain exclusive so who the hell are you 'Stephen' to say that they took a 'step backward'? If taking a step backwards means being the ONLY company to offer services for a highly touted, much anticipated item such as the iPhone then I would want to be in last place.

Too bad for all you babies who want this item and not want ATT for it as well. First off, I lived in a time when cell phones were NON-EXISTENT and to not have one is not really going to kill a person. Inconvenient...yes, deadly...no. Hell, Second. There are hundreds of other phones that a person can get with the carrier of their choice. If they don't like ATT, go to Verizon, Sprint, TMo....Not having the iPhone is NOT the end of the world. I repeat..NOT HAVING A iPHONE IS NOT THE END OF THE WORLD. Bunch of sniveling babies if you ask me.

Who

August 28, 2007 02:02 PM

No advantage to the T-Mobile option?
1) T-Mobile Hot Spot @ home
2) AT&T has the shittiest customer service. I mean really shitty. Meanwhile T-Mobile ranks near the top. That's reason enough. Before the iPhone came out, one of the big questions was why it was tied to AT&T because they were so infamous for crappy service, for many it was reason enough NOT to get an iPhone.
3) Did I mention the crappy customer service?

Commenter

August 28, 2007 02:23 PM

Amen

Carl Dawson

August 28, 2007 02:30 PM

First cell was Cingular >> GSM. Had "very bad" experience with them here in parts of SW Florida,and not in the hinterlands, but in the coast's cities. Switched away w/Cingular's understanding/approval. Thus not motivated to return or add GSM unless I am in Europe.

Charles

August 28, 2007 03:40 PM

iPod has been unlocked with a Linux open source hack. See
ipodlinux.org/
for the files and how to do it. It's still buggy (e.g., it doesn't sleep properly), but you can uninstall it. An interested hacker could polish the software.

Steve Wildstrom

August 28, 2007 06:02 PM

@Who
Even unlocked, an iPhone would not work with T-Mobile's HotSpot@Home service unless you also found a way to load the software required for unlicensed mobile access. That requires getting into some deep phone code, probably at the OS level. If it were simple, T-Mo would make it available on Windows Mobile Smartphones (they will eventually, but they are still working on it.)

Herb

September 3, 2007 01:02 PM

I seem to be an exception. I love my iPhone. It allows me to put out fires and use the web, etc., without hauling a 5# computer with me.

Ahem! Now for international use, had I known that AT&T was going to rip off the public I would not have considered buying the thing. I do travel out of the US. I called an spoke with AT&T and they told me that I can turn off Edge prior to going but I will still be billed for Virtual email and any WiFi use. In other words I can just have a non-functional device that is a phone only. Emails come to $.68 each and a couple of web pages will cost you like a very expensive suppository. Walt Mossberg wrote a column about this and nailed it right on.

I hate Blackberrys, my wife uses a corporate one and is just my thing. If you travel in Europe or the rest of the world, run don't walk away from the Apple Store.
Anyone want to buy my iPhone?

iomatic

January 13, 2009 11:49 AM


@negative posters here:

FAIL

Marlon Davis

March 4, 2009 09:02 PM

I will choose almost any other provider to att. I was a customer -- their arrogance was too much

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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