Can Apple + AT&T Shut Down iPhone Unlockers?

aalobode writes "Do Apple and AT&T have the legal right to stop hackers from selling unlocked iPhones? Under their terms, only AT&T may sell iPhones, and Apple gets a commission. When unlocked iPhones are used on other providers' networks, AT&T and hence Apple get nothing beyond what they earned on the initial sale of the hardware. Can they prohibit unlocking? Reselling? The article in Businessweek gives the for and against arguments, but leans toward the view that the hackers may have the law on their side for once."

Heres what the BBC says:

[BigBadBus (653823)]

http://news.bbc.co.uk/1/hi/technology/6966600.stm [bbc.co.uk]

Re:

[Aramgutang (620327)]

I find the following line from the article interesting:

Analysts believe Apple may still have time to modify the iPhone to tighten its locks before the phone is launched in Europe.

Since some European countries, such as Finland, do not allow the sale of phones that are locked to a provider, and many of the other countries have regulations that require operators to unlock the phones they sell on request, or after a certain (usually pretty short) amount of time, wouldn't Apple need to use the time they have t

Re:BBC is usually wrong about US law

[McFadden (809368)]

The British BC is usually wrong about the US legal system and even more off about Constitutional matters.

And your evidence is... Oh wait, you don't have any, because you just made that up.

IMO the legal right of Apple or AT&T to stop someone selling unlocking software will probably become a moot point, simply because if a company can do it, eventually some cracker somewhere will create a freely distributable version and release it onto p2p. Once that happens the only thing can Apple can do is update the firmware, which I would guess they have every right to do if they choose to.

In a nutshell, I think that allowing it to be unlocked would be beneficial to Apple's sales, but perhaps may cause (possible legal) problems in their relationship with AT&T.

Re:BBC is usually wrong about US law

[mstone (8523)]

If the history of iTunes is any guide, Apple will continue to roll out new measures that are strong enough to keep unlocking a niche issue, but won't waste time, money, and consumer goodwill by trying to lock the thing down completely. The geohot hack doesn't bother Apple or AT&T at all. Most people won't open their phone and start tinkering with the hardware. If somebody comes out with a pure-software hack that can be loaded and run with only a couple mouse clicks, Apple will probably take steps to make that harder. But in the long run, fighting to prevent hacks is a losing proposition, and Apple knows it.

The best way for Apple and AT&T to stop people from unlocking their phones is to develop software-as-a-service products that are only supported by the AT&T network. Maybe that means seamless integration between the AT&T network and the iTunes store, maybe it means streaming music & video that automagically syncs to your desktop computer's iTunes library, or maybe it means things none of us have even considered yet. Apple's whole business strategy revolves around the idea that people will pay for better quality, though.

If 'unlocking the iPhone' means 'keeping all the really good features of the iPhone and ditching the expensive suck factor of AT&T service', then unlocking will rule no matter what Apple and AT&T do. If 'unlocking the iPhone' means 'I ditched AT&T, but lost a bunch of cool features in the process', then only a handful of people will bother.

There are two main reasons Apple won't try to play the lock-in card.

First, Apple doesn't own enough of the cellphone market to have a 'lock' on anything. Their stated goal is to own 1% of the smartphone market by the end of 2008. Meanwhile, Nokia's goal is to own 40% of that same market. Apple isn't in a position to get pushy about anything right now. All that will do is alienate customers, and alienating customers doesn't help them increase their market share.

Second, Apple doesn't compete by locking out alternatives. It competes by offering the best package it can, and trusting consumers to think the package is worth the price.

The unlock is different now

[StarKruzr (74642)]

There's already been a software unlock produced from the fruits of the hardware one. It's not at all difficult to unlock an iPhone now.

No $#%!, Sherlock

[conspirator57 (1123519)]

I bought a computer and have the right to modify it and subsequently turn around and sell it? Amazing!

What will I do with this new-found freedom? ...the same thing we do every night, Stimpy: try to take over the world!

Re:

[CaptainPatent (1087643)]

I bought a computer and have the right to modify it and subsequently turn around and sell it? Amazing!

What will I do with this new-found freedom? ...the same thing we do every night, Stimpy: try to take over the world!

The issue isn't necessarily as simple as that. While I do think the DMCA is mostly crap to begin with, it's what the country is currently abiding by so it's what we have to look at.
FTA:

Experts believe that AT&T and Apple will point to the DMCA's section 1201, stating that "no person shall circumvent a technological measure that effectively controls access to a work protected under this title."

Apple did take technological measures to assure their business agreement with AT&T was fulfilled and they do have technological measures to assure their device is not tampered with so there is actually quite a bit of room on Apple and AT&T's side for debate.

The article does make a good point though that this is si

Re:No $#%!, Sherlock

[Experiment 626 (698257)]

Apple did take technological measures to assure their business agreement with AT&T was fulfilled and they do have technological measures to assure their device is not tampered with so there is actually quite a bit of room on Apple and AT&T's side for debate.

The DMCA prohibits circumventing technological measures that protect a copyrighted work from unauthorized duplication, not measures that protect a business agreement from becoming unprofitable.

Re:No $#%!, Sherlock

[HTH NE1 (675604)]

It's Stimpy and the Brain
It's Stimpy and the Brain
One's an eediot and the other's a rodent!

Re:

[Clock Nova (549733)]

The Brain: Are you pondering what I'm pondering?

Pinky: I think so Brain, but isn't Regis Philbin already married?

the DMCA finally does something good

[wizardforce (1005805)]

So will Apple and AT&T's legal action deter hackers? Hardly. Individual users are already allowed to unlock their own phones under an exemption to the Digital Millennium Copyright Act (DMCA) that the U.S. Copyright Office issued last November.

ha ha

Re:the DMCA finally does something good

[Conspiracy_Of_Doves (236787)]

It isn't really the DMCA that's doing it. If the DMCA never existed, you would still be allowed to unlock the phone. This is something that someone had to decide that the DMCA didn't cover.

"only AT&T may sell iPhones"

[larry bagina (561269)]

only AT&T may sell iPhones

Wrong. Apple sells iPhones (through their website and retail locations). The phone isn't activated at the time of sale (it's done at home with iTunes). AT&T announced 146k activations when Apple announced 270k iphones sold. You do the math.

Re:"only AT&T may sell iPhones"

[j00r0m4nc3r (959816)]

You do the math.

(sqrt(270000) * 146000) / pi = 24148205.619474491768596100626108

Re:"only AT&T may sell iPhones"

[deander2 (26173)]

haha....omg, who are the morons who moderated this informative? =p

Re:

[by Anonymous Coward]

The question:

Form a square with every iPhone sold and mark the phones that are in the first row. Make a phone call from every marked iPhone to every activated iPhone. Place the phone bills in a circle, what is the circle's diameter?

Re:"only AT&T may sell iPhones"

[MyLongNickName (822545)]

The question:

Form a square with every iPhone sold and mark the phones that are in the first row. Make a phone call from every marked iPhone to every activated iPhone. Place the phone bills in a circle, what is the circle's diameter?

If that is the question, then the answer is wrong. You cannot place a call to your own phone.

Re:

[Firehawke (50498)]

I doubt they use Caller ID data, since that's so easily spoofed. They probably use the much more secured cousin called ANI. When I worked at AT&T back around the 1999-2000 time frame, we used ANI on pretty much every call. While we were unable to use it as sole verification of who was calling, ANI had a 95% successful ID rate for telephone lines and the remaining 5% was 'no data'-- never did I see an incorrect entry.

If AT&T could do this on lines coming from the Baby Bells, I certainly believe they

Push comes to shove. . .

[TimmyDee (713324)]

If the group that has the real iPhone unlocking software does get hit with a legit lawsuit and has to cease and desist, here's to hoping they release it for free along with the source. What's to say they can't? At that point, they aren't selling something. Maybe they could take donations? IANAL, but I think such a move would be feasible.

a thought

[thatskinnyguy (1129515)]

Collecting bonus money from activations isn't really in Apple's business model. So why should they even bother with trying to hault cracking of the iPhone? The product has already been sold. Apple made their official dollar off of it. Their interests should really die there. It's not like crackers are replacing the Apple components of the software; just defeating the AT&T parts.

Here's an article that better explains my point of view [com.com] because I'm an ineloquent rambling idiot.

Re:

[UbuntuDupe (970646)]

Yes, they will sue Apple over everything they do to promote AT&T-free iPhones ... that can be traced to Apple.

So, Apple is forced to half-heartedly admonishing people not to do it, removing discussion of how to unlock on Apple-run websites, etc.

But I'm sure Steve Jobs would love it if people bought iPhones and unlocked them, if otherwise they wouldn't buy one. He just can't talk about it.

That's why we can't have nice things.

[mcmonkey (96054)]

Not for nothing, but when the next gen iPhone comes out and it's store activation only and not home activation, you'll know why.

I guess it comes down to

[JustNiz (692889)]

I guess it comes down to who owns the phone.

If when you buy an iPhone you are actually buying the ownership to the phone, you can do what the hell you like to it as its yours.

but...

If Apple are just selling a licence to use the iPhone (kinda like what Microsoft do with Windows) rather than actually selling the ownership of the iPhone itself, then they could legally and justifiably require you not to unlock it as they still own it.

Re:I guess it comes down to

[gfxguy (98788)]

I don't think they can do that, though. When you buy software, you are generally paying for the "right to use" the content on the media. You're allowed to microwave the disc, throw it out the window, make artwork out of it... you're just subject to copyright rules about the contents.

What you're looking for is if the end user agreement prohibits modifying or loading new software. I'm sure it prohibits modifying software, but if it's just a matter of a simple hardware hack and ADDITIONAL software, I don't see how there can be a legal standing against.

Probably the reason is because I'm not a lawyer, but it seems to me precedence is on our side.

Re:I guess it comes down to

[SpaghettiPattern (609814)]

I guess it comes down to who owns the phone.

If read the fine print correctly I apparently leased an Alco2Jet® Carbonator. [sodaclubusa.com] On the other hand, I never signed a contract of any kind and I refuse to acknowledge an EULA for hardware I buy.

I assume Sodaclub wants my money for their hardware, wants still to poses "my" hardware and wants to charge me for refills.

That last point alone is a reason to "illegally" fill my own "Alco2Jet® Carbonator" with cheap and illegal CO2. And when the secret police shows up at my door step I will tell them to piss off, fry on the chair for that and thus die a martyr for the right to own.

Re:I guess it comes down to

[elrous0 (869638)]

When I buy a Xbox, I can do whatever the Hell I want with it too. But that hasn't stopped The U.S. government from raiding [escapistmagazine.com] companies that make mod chips for the Xbox.

Do I own it or not

[backslashdot (95548)]

If it's illegal to unlock the phone, that means I dont own it. Am I leasing it? How the hell else is it possible for me to outright purcahse something and not be able to do whetever the hell i want with it (besides to commit something that is already a crime obviously -like throwing it at someone).

If I buy a t-shirt can they make it illegal for me to use it as a rag?

Is it illegal to color the iphone with a marker? Is it illegal to open up the iphone and melt it down? Is it illegal to take the battery out of the iphone and use the large battery in a hobby RC car project? If it is, it damn well shouldn't be.

Re:

[MarkovianChained (1143957)]

"Is it illegal to open up the iphone and melt it down?" Is it illegal to blend it [willitblend.com]? :)

Re:

[MikeBabcock (65886)]

Its strange really, if you're an american its illegal to defeat copy protection software or hardware on your own devices under the DMCA, so congress apparently believes it has the right to restrict usage of your own private property already.

Re:

[IthnkImParanoid (410494)]

violates the software license agreement, so you infringe copyright.

Game over, Phoenix Wright.

Simple Echnomics...

[jellomizer (103300)]

It is simple economics. The full-price of the iPhone (The physical cost of the phone+the hidden cost of being stuck to AT&T, in terms of rates, service availability, contracts...) is higher then the economical efficiency point. So what happens is black market activities. Hacking the phone to work on whatever carrier they want, so they get a better value from the phone. Now is it legal, I would think so yes Apple and AT&T are loosing money from the deal but that is the cost of doing business realizing that people are not going to play by your rules all the time.

Re:

[cowscows (103644)]

I think it's less about economics and more about technically inclined people enjoying one of their hobbies, messing around with technology. There's just a lot more news bits about this because of the hype that Apple and the iPhone have been through.

Just about every mobile phone ever made has probably had at least a few geeks pull it apart to tinker on the insides, you just didn't hear about it unless you went looking for the information. But in the case of the iPhone, Apple (and others) have already done th

Warranty

[sgauss (639539)]

Since unlocking involves some soldering and such, at least according to the account I've heard, clearly it violates the warranty. And don't forget, the iPhone has a soldered in battery; you're supposed to send the phone in after a year to take care of the battery. So, if it breaks or the battery dies, your unlocked iPhone is a very expensive paper-weight.

Re:Warranty

[frdmfghtr (603968)]

Skill with a soldering iron is not required [macnn.com].

Apple + AT&T?

[Nastard (124180)]

AT&T, sure, but why the hell would Apple want to stop people from unlocking these?

Re:

[Selfbain (624722)]

They get royalties from AT&T.

Doctrine of First Sale-Nobody Knows The Rules

[Nom du Keyboard (633989)]

I would say that under Doctrine of First Sale, you can do what you want with it once you own it.

However, manufacturers have managed to prevent you from modding your game console after you own it, or at least prevent other people from selling you mod chips and modding services, so now it's murky.

Wouldn't Ford love to only have you put Genuine Ford Advantage replacement parts in your car? They can't. Nor can they force you to only buy Ford approved gasoline from licensed dealers.

Yet Apple can't prevent you from putting non-iTMS purchased music into your iPod -- although that's probably because you'd never have bought the iPod if you couldn't rip your own albums and play them in it.

So what can, and cannot, Apple and AT&T do here? Besides scaring off potential unlockers, whatever the courts are willing to allow them to get away with. Clearly these days, there is no bright shining line of what's allowed, and what isn't.

Loan your new CD to your friend to listen to and the RIAA probably won't come knocking. Let him get the tracks through KaZaA and you may have an ugly time of it. Nobody knows the real rules any longer!

Mod Chips

[thomas.galvin (551471)]

So why is this legal and mod chips illegal? What's so special about computer hardware when it's got an MS or Sony logo on it, as opposed to an Apple or AT&T logo?

Re:

[radish (98371)]

Intent.

The purpose of a modchip is to disable or circumvent a copy protection mechanism built into the console. The DMCA makes anything designed to do this expressly illegal.

Unlocking a phone has nothing to do with circumventing copyright and hence an iPhone modchip (if such a thing existed) would be legal. However, a software based unlock is more interesting as the DMCA also generally forbids modification of binary software (e.g. reverse engineering) except in certain circumstances. Luckily I believe one o

Subscription fee

[Per Abrahamsen (1397)]

When you sell a mobile phone below cost, you are supposed to make up for the difference in the subscription fees. Which are mandatory to pay in the binding period even if you unlock the phone and use it on another net.

At least that is how it works with GSM phones in Denmark. You can unlock them and switch to another provider legally, but you have to continue to pay the subscription fee for the binding period. This is common, and accepted by all the service providers.

Also: The maximum binding period is six month, providers are obliged to tell the unlock key after that, and all advertisement must include the minimum total cost in the binding period (initial price plus subscription fee for six month) in order to make it easy to compare prices.

Good regulation does wonders to improve the efficiency of a market.

Re:

[jesco (598308)]

You're right. And because of the fact that you pay the subscription fees whether you use the phone or not, the phone doesn't even need to be locked. I can plug in any SIM card I want into my phone and use it, not the just the one from my original provider. (applies to me in germany, at least)

All parties got their money, both Apple and AT&T. And quite a lot of it.
So I think they are really overdoing this digital rights thing by additionally locking the iPhone to AT&T cards.

Can't Use DMCA...

[maz2331 (1104901)]

They certainly can't use the DMCA to block the unlocking. This is almost identical to the Lexmark International, Inc. v. Static Control Components, Inc. case a couple years ago. Basic upshot of that ruling is that DMCA doesn't cover hacking to unlock a device for interoperability and third-party components.

If they try to sue using DMCA, they will almost certainly lose.

Law, schmaw -- this time, the tech is your problem

[Sloppy (14984)]

This product is not "merely" a phone, and the success of conventional unlocking techniques can't be relied upon indefinitely. Just look at the multitude of copy-protection (i.e. anti-interoperability) techniques that various industries are legally allowed to implement (even legitimized by laws like DMCA) and you will get some whiff of the disgusting things that Apple could put into a software update.

Sure, workarounds for these things will happen, but it won't exactly be easy, and it'll keep the users who take advantage of them at a disadvantage for purposes of (legitimate) software maintenance.

There's considerable precedent for the law allowing phone owners to use their phones however they wish, so I don't think that is worth worrying about.

If you want to worry about phones, the real issue is that you don't know what they're doing. [com.com] I think that phones are going to become THE poster-child for the risks of proprietary software, in a way that makes concerns about desktop operating systems, printer drivers, etc, seem trivial and superficial. The need for open and trustworthy phones is extreme, even if Joe Schmoe doesn't get it yet -- and the government is helping us quite a bit these days, in revealing that urgency.

Apple's viewpoint

[PureCreditor (300490)]

Apple actually wants people to unlock the phone. If we assume that customers who unlock the phone for T-Mobile would not subscribe to AT&T ever, then Apple should consider it an extra phone sale (close to 50% profit margin on the hardware) instead of a lost revenue stream (shared with AT&T).

Also, unlocking the phone might void the warranty, saving Apple even more costs down the road.

While Apple might not have the legal grounds to prevent unlocking the phones, they can make the unlockers' lives a living hell. Most phones never require a firmware upgrade once they're released (and thus are feature-fixed). But the iPhone prides itself on bug-fixes and new features available via firmware upgrade. Apple probably have the rights to refuse to firmware-upgrade any unlocked phones.

Or perhaps Apple can force iTunes to refuse even syncing with unlocked phones, thus making loading music/pictures/videos a huge pain. But why would Apple want that? Any device that can access iTunes Music Store is like free money for Apple.

My bets will be if anyone is upset over the locked phones, it should be AT&T and not Apple.

Some things never change

[dave562 (969951)]

When I was a 17 year old kid I had an unlocked Oki 900 that I used on AT&T's network. I'm pretty sure they weren't too happy that the phone could switch between five different sets of ESN/MIN pairs.

Re:

[mzs (595629)]

They are already available:

http://gizmodo.com/gadgets/like-the-iphone/meizu-m inione-specs-revealed-its-actually-got-some-juice- 261388.php [gizmodo.com]

Re:Yeah

[Selivanow (82869)]

Usually when you "buy" a phone (in the US at least) you are getting a discount in exchange for a lengthy contract. If you don't want the contract you buy the phone outright and can do anything you want with it. This is the same issue that the auto industry had at one point. Manufacturers did not want 3-party parts sold and didn't want people to fix their own vehicles. The auto industry was pretty much shot down. Unless you are breaking a law, ie: modifying a phone to output a stronger signal, you can do as you please with any item you own. That is not to say that you can not be held liable if you do something to an item you own and it ends up damaging someone else's property or another person.

Re:

[notthe9 (800486)]

We don't know for sure what Apple and AT&T's agreement is, I don't think. It's not necessarily as simple as Apple gets $500 and AT&T gets $60/month.

Re:

[PitaBred (632671)]

The question is: Does it matter? The answer is, no it doesn't. If I buy hardware from someone with no signed contract alongside it, I own that hardware free and clear, and can do whatever I want with it. Including modify it, sell it, eat it, whatever.

Re:I don't even have to RTFA

[arodland (127775)]

... so they're going to send ninjas with screwdrivers into the streets to steal people's iPhones, make hardware modifications, and then quietly return them?