I had the original iPhone via AT&T in the US. I didn’t wait in line, as I didn’t buy on day one, but that’s an aside. Why are these buggers locked in the US? My experience with other phones and other jurisdictions is that they are not, or at least they are not after the contract expires. (Apologies for the ‘first world problem’ blog entry). In other countries, you can bring your unlocked smartphone to a cheaper monthly account (no phone subsidies being paid off).

People who spend more than a week out of the USA in a year (like me)

We want to SIM swap rather than suffer roaming charges. That’s not just for voice, that’s for data too. I like using Google Maps to traverse the UK with. I can’t do that with a locked US iPhone. There mush be a bunch of traveling Europeans like me who’d like to availing of the cheaper temporary plans in their ‘home’ countries before returning to the states to work. A ‘Pay as you go’ account in the UK that works with my iPhone costs me about $100 for a whole year (I’m only there for three separate weeks). That’s with data!

Power travelers are the same. Roy Singham, the ThoughtWorks owner, probably has a SIM for every country he regularly goes to. There are many executive types that are the same. For him it is about data+voice too.

What we know about unlocked iPhones.

They are in a database that Apple keeps. That could even be a spreadsheet for all we know, but all the purchased-as-unlocked iPhones are in it. The ones that are unlocked after purchase are added to it, and there’s a mechanism via iTunes to action the unlock and notify customers that it happens elsewhere.

AT&T’s iPhones.

These have always been locked; Permanently so. At least the subsidized ones are. You can pay premium for an unlocked one, but there’s no cheaper monthly fee from them if your do. They are so from ‘birth’ to when you’ve inevitable sat on it, dropped it, or seen it fade into obsolescence/disfunction after some years. It is rumored that AT&T hardly make any money from the iPhone. More specifically, the monthly fee barely covers the ongoing costs and subsidized hardware.

Me trying to unlock my end-of-contract 3GS.

So as is the custom in other countries for other phones, I’ve tried to call the teleco to get it unlocked. Yesterday I spoke for three AT&T employees via their ‘611’ support service, and one Apple employee who AT&T transferred me to. All people were helpful, and incredibly polite even though I was trying to push my point “please could you unlock my end of contract iPhone 3GS”. I’ve been unsuccessful in that endeavor, but I’ve found out some things that are worth writing about.

In initial call to AT&T I was assured that only Apple can unlock iPhones. That’s true, I said, but only on request from the teleco in question. We didn’t agree, so I was transferred to Apple. That fellow confirmed what I had previously thought, and we completed the call at that point.

My second call to AT&T took be through the same process, but I managed to get bumped to a manager, after thanking the associate for her help and caring about the issue. The manager I reached was very sympathetic to my wish, and ultimately asked a couple of back office techies who’d really know, and the answer came back:

–> AT&T do not know how to initiate the electronic iPhone unlock via Apple

It seems to me that Apple could either unilaterally unlock end of contract iPhones if that were true, or send training materials to AT&T so that they can gain the capability.

Sprint’s iphone (4S)

Just before the launch of the 4S, we thought Sprint may unlock them on request. Sprint has allegedly looked at the $4Bn fee they handed to Apple though, realized they need to double their subscriber pool to cover it. That means they need revenue from the same iPhone after the 24th month that would be the completion of the contract with the customer. Whether that is your extended contract, or your Mom after giving her the phone, they don’t care. As with AT&T you don’t get a reduction in monthly fee, and that is when their real profits start.

Verizon.

They will unlock for customers who have ‘accounts in good standing’. That reasonably means that Verizon think of you as someone who paid your bills on time for 60 days or so.

Value of end-of-contract iPhones.

Given the free 3GS phones available now, and the fact that Apple release a new iPhone every 14 months, the iPhone you buy today is not going to have much resale value. If the phone is locked to AT&T and new customers could add a new one for free, what value is there in an end of contract iPhone? It is zero really for US markets. A silver-lining is that the iPhone could be unlocked for a new life abroad, and for that there’s some value. That unlock is likely to be some unapproved means, and there’s no guarantee that Apple wouldn’t be able to close down the unlock/jailbreak in successive iOS releases. Actually that hypothetical re-closure is more about jail-breaking.

So a legitimately and permanently unlocked iPhone has extra value, once you’re hellbent on upgrading and selling your old iPhone. No-one has to fear upgrading iOS versions and the possibility of it not working as wished for after.

Conclusion.

I think us foreigners living in the USA are fools to go with AT&T iPhones right now. We should go with Verizon and unlock after 60 days. The GSM side will work in UK, France, Germany, Brazil (etc) with some modest SIM swapping. We get the best of both worlds. Verizon should not worry as we will pay our two years of fees for US CDMA usage. It is just that we want to SIM-swap for a few weeks a year, when ‘back home’. As I said before it not just about voice any more; It is data too.

I wonder if people who have already started their AT&T iphone 4S plans two weeks ago shouldn’t cancel (within the 30 days) and reorder a Verizon edition.

Toothless regulators.

The FCC is the regulator here in the USA, and historically they do not step into contractual imbalances. Compare them to OFCOM (UK) and other European bodies who have forced cheapening changes on their country’s telecos.

PS - I do not care about data+voice concurrently feature, or the ‘higher speeds’ that AT&T have (that Verizon do not).

Addendum (Nov 15, 2011)

I’m safely on a Verizon iPhone now. Not being able to surf while making a call is the hypothetical downside. Well that and Verizon’s iPhone4s network speeds being slower than AT&T 3.5G one. Fast enough to watch movies though, so why would I want it faster??

AT&T are charging me a $60 early termination fee given I cancelled ten or so days before my natural end of two-year contract. “Michael” (a helpful fellow in the call center) said they can setup a forward note for themselves to credit me that amount seeing as my normal last month charge should apply, but their system is inflexible (my words) enough to make that a manual human step. I’ll make a calendar note. I also passed on my rationale for canceling [ this whole posting Michael if you’re reading ], and I got to hear again that Apple hasn’t provided a mechanism to unlock iPhones. I’m suspecting that’s a scripted response. Bye bye AT&T, sorry that you feel the need to gouge customers in their 25th month and onwards.

Update (April 22, 2012)

Verizon iPhone 4S unlocked after a simple 5 mins phone call. AT&T change their mind - I hope I helped mount that pressure. Will be testing it soon with the Wife’s 3GS which is out of contract. Also meeting up with buddies recently, I was taunted for having a slower 4S service through Verizon. We did a quick pub-test - watching the same movie clip on Youtube at the same time - there was no difference :)