Apple Cracks Down On iPhone Unlockers

An anonymous reader writes "It looks like Apple and its wireless operator partners have finally figured out a way of cracking down on iPhone unlockers by making it a requirement to sign up for a contract before you can get your hands one. "It's obvious why this has happened though. This method means you're tied into a contract, or you're paying O2 and Apple a massive wad of cash for the privilege of owning a 3G iPhone. We're disappointed about this decision, but it does make business sense." Both ATT in the US and O2 in the UK are implementing the new activation system on July 11th, when the iPhone 3G goes on sale."

Re:Correction

[x_MeRLiN_x]

And if you knowingly accept the subsidy from AT&T/O2, you can't ethically use another provider.

Seems reasonable

[ReiDragon]

This seems like a normal practice to me to be honest. Almost every smartphone that people will buy will come with a contract at the time of purchase to get the price lowered to a point that is reasonable. It happened with my old 8525 to get the $600 phone down to $285, and now it's happening with the iPhone to get the $400 phone down to $200. It just seems to be the industry standard, and before people start to complain about not being able to use it with t-mobile or another GSM carrier, I just want to say that you don't NEED to get an iPhone. You can get whatever smartphone comes with your service. If you want to travel with a smartphone, then you can get a different one too to put different SIM cards in and only pay for those times you use it.

This makes sure the new iPhone is NOT CHEAPER.

[BoldAC]

The contract lock-in insures that the new iPhone is more expensive than the last.

If you do the iPhone math [tech-recipes.com], the new phone will cost you more than the older phone despite the "half the price" ad campaign.

If AT&T really drops free sms, it'll cost even more.

I don't mind paying more. However, for somebody like me not in a G3 area, why should I have to pay the G3 transfer higher prices?

Re:Going to be hard in most european countries.

[Splab]

Denmark has laws against how long you can tie a person into a contract.

And the minimum total spend on the contract has to be clearly listed in the commercials.

Re:Correction

[Firehed]

I damn well can. You don't set my ethical standards, I do. No matter how it happens I'll end up paying a premium to use it on another carrier (early contract termination fees, etc) that covers the subsidy so it's a financial non-issue; coupled with the fact that wireless providers have no standards whatsoever (ethical or otherwise), you'll have to excuse me for not going out of my way to please them.

Re:Correction

[elrous0]

If Apple cared about ethical behavior towards us, they would also offer an unsubsidized version for consumers at a higher price. Since they refuse to do that, why do we owe them anything?

Re:Correction

[God'sDuck]

Or you get the contract and immediately resell it on one of the contract trade sites: http://www.google.com/search?q=trade+cell+phone+contract [google.com]

You need a contract

[DrYak]

We'd be much better off if mobile phones were sold as items like computers or telephones, without contract, and the phone companies concentrated on providing a good service, instead of 'adding value' by gimping phone software, charging insane amounts for data, or tying users into long term contracts.

None the less, you still need a contract with some GSM or 3D operator to be able to use your phone. Otherwise, you'd be buy an iPod Touch instead.

So while you're at it, as you'll be buying a phone and a contract anyway why not the phone company giving you some rebate as they're going to make wads of cash from the monthly fee any way ?

The only current problem with the iPhone is that they have exclusive contract with some service providers.

Whereas, in several European countries (including here in Switzerland, but also mandated by law in France as reported recently on /.), you just buy whatever phone you want from the shop. Either you pay the phone full price. Or, if you sign a new contract or extend a previous one, that contract's provider gives a N$ rebate, to be used with whatever phone you choose to buy simultaneously in the same shop. The amount of rebate depends on the contract you picked up.

The two aren't even bound together (the phone was just taken from the shelf) and nothing forces you to use this contract and this phone together (you could cheaply get and extra handset by extending your own current contract and give the phone as a present to you S.O.)

Some service providers have their own shop which may sell some special package with a "special edition phone" (= read : the provider logo on the phone's shell, 1 additional customized screen background and ringtone, and some preinstalled crap that you won't use at all).

But in most shops and malls, you just pick up the phone you want, and eventually the contract you want from the provider of your choice.

The idea of subsidizing phone with provider contract isn't stupid. It's the complete lack of choice for those contract that is debilitating.

Just what ethical duty is that?

[thefinite]

And exactly what ethical duty to us would they be upholding by offering an unsubsidized, contract-free iPhone?

I'm curious to hear your answer because, while the grandparent was right about the ethical duty of fulfilling a contract you agree to, I don't think Apple owes an ethical duty to us that would require them to offer an unlocked phone.

You know what else makes sense?

[fishbowl]

You know what makes business sense to me? Not buying an iPhone.

Re:UK are giving them away for FREE!?!?!?

[bestinshow]

Since when was the pound sterling a postfix symbol? You don't write 50$ do you? On the other hand, at least Slashdot has recognised your character set encoding...

But yes, 8GB is free with the £45 tariff, and the 16GB is free with the £75 tariff. Still, assuming an 18 month contract, that ain't cheap. £1350 :(

Re:Thank goodness for Android

[clevguru]

I am a current Alltel soon to be Verizon Customer and cannot wait for a smartphone with Android on it. I like more and more consumers have made it practice to buy my phones out of contract when I can get the phone on ebay or somewhere else for almost the same price as in the store. So I think this trend is increasing among the tech-saavy consumers.

Re:Seems reasonable

[megaditto]

Perhaps you are not their target customer in the first place?

Re:Seems reasonable

[paulhar]

> We'd be much better off if mobile phones were sold as items like computers or telephones, without contract
Buying something forms a contract so it's impossible to buy something without one.
And computers are almost always sold with Windows installed, licenses, and thus additional contracts too.
[Typed on an eeepc, Linux]

Re:Correction

[linuxci]

I doubt it. I believe that in Steve's presentation yesterday, he said that the maximum price anywhere in the world would be $199... meaning that they aren't going to allow any unlocked iPhones. Not to mention, everywhere (that I'm aware of) that Apple is selling iPhones, they're doing it with exclusive agreements with one carrier in each market.

Not quite true, in many of the new markets (Australia and Italy for example) they've signed multiple carriers.

For the contracts already negotiated such as AT&T for the US and O2 for UK, they had to remain exclusive, but I do get the feeling that Apple are learning as they go along here and if they'd had the opportunity they'd probably open it up to more carriers in their original markets.

Re:Correction

[molarmass192]

Italy does not have an "exclusive" carrier agreement. Also, France does not allow a phone to be sold only when tied to a contract. In fact, I think France forbids the selling a phone without an unlocked option. There's also some similar weirdness in Germany. So, regardless of what Steve said alluded to in his presentation, not much will change wrt the current iPhone options in Europe.

Re:Correction

[eiapoce]

You can also cancel your contract and keep the phone by paying a $175 termination fee. Since the new models are $200 cheaper than the old models, the new phone is still cheaper than the old one that cost $400.

Are they unlocking the terminal after the cancellation? Otherwise it's not like you really own it afterwards...

Re:Correction

[Thelasko]

That's the problem with companies today.

Not just today, it's been done this way for over 100 years. [wikipedia.org] Ever notice that you can't buy old fashioned safety razors anymore? By giving away razors with more blades they encouraged men to switch to blades that are more expensive, and forced the inexpensive blade manufacturer's out of the market. It's the business model that made Gillette [wikipedia.org] the company [wikipedia.org] it is today.

On a side note, does anybody know where I can get a package of 10 hot dog buns?

Re:Correction

[notdotcom.com]

...except things like using it as a tethered 3g modem with a laptop, which the firmware/AT&T prevent. Otherwise, I'd buy one. "Oh, laptop internet access?! Yeah, here, you're going to need a $50 aircard and a $59/month additional plan for that, capped at very low download Kb/month." (5Gb?) = double dipping.

Not going to be sold online..

[MrPerfekt]

I think the bigger story here is that Apple will not be selling them online. As far as I know, the first Apple product not to be sold online since they started the Apple Store.

From the Apple Store Online:

Where to buy:
iPhone will be available in 8GB (black) and 16GB (black or white) models1 at Apple Retail Stores and AT&T Stores.

The absence of "right here on this page" is sad. If you want one, you're going to have to sit with the mob on July 11th. Boo.

UK 7 day cooling off period?

[Anonymous Coward]

So, I buy a contract, buy a phone, go back to the shop and cancel my contract under the 7 day cooling off period [compactlaw.co.uk]. What can go wrong?

Isn't this illegal?

[deAtog]

IANAL but this sounds a lot like Product Tying [wikipedia.org] which is illegal under US antitrust laws. According to the Wikipedia article, you must show proof of the following conditions in order to be considered as tying:

1. two separate products or services are involved; (Check)

   * Apple's iPhone
   * AT&T Phone Service

2. the purchase of the tying product is conditioned on the additional purchase of the tied product; (Check)

   * The purchase of an iPhone is conditional on signing a contract for AT&T phone service.

3. the seller has sufficient market power in the market for the tying product; (Check)

   * AT&T is one among a few phone providers for which the iPhone could be used and contains a substantial portion of that market

4. a not insubstantial amount of interstate commerce in the tied product market is affected. (Check)

   * AT&T is a national cell phone service provider who can directly impact the success of other national providers which are otherwise capable of using the iPhone on their network

Re:Correction

[IronChef]

Since it's an iPhone, you'll want a data plan as well as a voice plan...

Not all of us. I use my unlocked/hacktivated iPhone on ATT with my old SIM and no data plan. (EDGE data is disabled in the phone's config.)

I am on a family plan. I can't go legit with the iPhone without a contract extension, right? Well, that extends the contracts for all phones on the family plan. That wasn't acceptable, and I didn't really need the data plan anyway--it just wasn't worth the money to me.

(Why did I buy an iPhone? My old phone was dying, and getting a refurb iPhone cost $250, about the same as some other neat-o phone that I'd also have to unlock.)

Admittedly, I am an edge case, but still, there are reasons to use the iPhone just as a phone plus wifi device.

I just hope they don't start nuking hacked iPhones. It's a risk I am willing to take though.

Three words: "Nokia N800 series"

[paco verde]

The iPhone alternative (for freedom lovers) [cnet.com]

"This article [cnet.com] explains how to get an even better mobile Internet experience, without having to do business with either AT&T or Apple--with no contracts and no $60 per month bill just to surf the Net."

(Surveillance State blog [cnet.com])

Re:Correction

[LKM]

Where I live, there will be two carriers. Furthermore, one of them (swisscom) sells all phones unlocked; I have high hopes they'll do this for the iPhone, too.

Re:No turtlenecked CEO necessary

[kmac06]

No, that's what's supposed to happen in mob rule. Some of us believe in fundamental limitations on government power and regulations in order to protect our freedom. And yes, I would consider the ability to sell a phone with certain additional requirements part of freedom, just as I would consider the ability to sell a phone without those strings attached part of freedom also.