Today CNBC and Engadget are both reporting that the iPhone has been unlocked. George Holt and several others were able to unlocked the phone using a combination of hardware and software. According to Engadget they have apparently now been able to completely use software to unlock the phone.
Of course this begs several questions
- Where can I get this?
- Is this legal?
- How will Apple and AT&T be affected?
- How will Apple and AT&T respond?
The first question is sort of easy. You can check out Holt's blog. And the group has also setup a website.
Is this legal? I am not a lawyer but as Engadget's Nilay Patel says an exemption to the DMCA was granted for unlocking cellphones for personal use. This was done in November of 2006 and the exemption expires in 3 years. So you could in theory unlock your phone. I also read the Apple iPhone license which does not mention anything about the network. I think a big oops is required here. Apple should have enforced the network operator agreements by licensing the phone solely on the network assigned to the country of primary use.
Some people think that Apple will not suffer and AT&T will lose some of its iPhone users. I would disagree this adversely affects both.
Apple gets revenue from the service contracts associated with an iPhone. It could be anywhere from $1-$10 but an analyst, Gene Munster, of Piper Jaffray estimates that the deal is around $3 for an existing customer and $8 for a new customer. Conservatively that is between $72 and $192 over 2 years that Apple would lose for each unlocked phones. I also suspect that AT&T would be expecting big things by giving Apple revenue. So they might have a minimum or penalties if certain targets are not met.
AT&T on the other hand would get a termination fee of $175 per phone although they would lose $1440 per phone over the two years at the low end. More accurately they would lose 1143.90 per phone if the user from the initial frenzy was to leave. This calculation includes the termination fee and 2 months of bills deducted from the potential subscription revenue. And as pointed out by some you could buy a new phone from Apple and never activate the phone with AT&T potentially. So clearly both Apple and AT&T have a lot to lose.
So far no reaction from AT&T or Apple. However, speculation abounds that an update might be coming to block the unlocking. Only time will tell.
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