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Can Apple + AT&T Shut Down iPhone Unlockers? 318

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."
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Can Apple + AT&T Shut Down iPhone Unlockers?

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  • by wizardforce ( 1005805 ) on Tuesday August 28, 2007 @01:52PM (#20387149) Journal

    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
  • a thought (Score:4, Interesting)

    by thatskinnyguy ( 1129515 ) on Tuesday August 28, 2007 @01:58PM (#20387241)
    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.
  • Warranty (Score:3, Interesting)

    by sgauss ( 639539 ) on Tuesday August 28, 2007 @02:02PM (#20387315)
    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.
  • Apple + AT&T? (Score:3, Interesting)

    by Nastard ( 124180 ) on Tuesday August 28, 2007 @02:02PM (#20387323)
    AT&T, sure, but why the hell would Apple want to stop people from unlocking these?
  • Re:No $#%!, Sherlock (Score:1, Interesting)

    by Drakin020 ( 980931 ) on Tuesday August 28, 2007 @02:05PM (#20387371)
    But do you have the right to buy a computer with Windows installed...Modify Windows to work the way you want it to (Lets say remove DRM features) and re-sell it?

    I think not.
  • by Anonymous Coward on Tuesday August 28, 2007 @02:17PM (#20387571)
    Then replacing the battery is easy.

    And you probably don't give a rat's ass about an otherwise useless "warranty" anyway.
  • Re:No $#%!, Sherlock (Score:3, Interesting)

    by CaptainPatent ( 1087643 ) on Tuesday August 28, 2007 @02:19PM (#20387583) Journal

    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.

    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 similar to car stereo manufacturers purposely producing stereos that would only work with their cars and preventing others from making such stereos. Because the carmaker was the only manufacturer of the stereo, they could charge whatever they wanted because of their forced monopoly in the market.

    The case is similar because of the control circumvention, but one point the article did not point out is that case is also very different because there is no forced monopoly.

    The car was the initial base cost and the stereo (when it breaks or needs replacement) was an uncompetitive and forced monopoly. In the case of AT&T, the iPhone is the base cost, but you still are given competitive rates. If AT&T began charging much more than usual rates strictly for iPhone customers, then the case would be identical, but because of other offerings it does not produce the same monopoly. If this were any other phone but the iPhone with network circumvention nobody would even care (I know because almost all phones are only made to run on one network.) Some may also argue this to be a bad business decision and plan to "liberate Apple from themselves" by hacking the iPhone, but if they made a bad decision, the best way to let them know is to not invest in their product which is already being done looking at iPhone sales.

    Nevertheless, I think this case may be more of a nail-biter than most slashdotters would like to think.
  • Re:Yeah (Score:3, Interesting)

    by notthe9 ( 800486 ) on Tuesday August 28, 2007 @02:25PM (#20387679)
    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.
  • Subscription fee (Score:5, Interesting)

    by Per Abrahamsen ( 1397 ) on Tuesday August 28, 2007 @02:25PM (#20387693) Homepage
    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.

  • by BUL2294 ( 1081735 ) on Tuesday August 28, 2007 @03:10PM (#20388345)
    I love it when Europeans say, "no our phones are unlocked." Bullshit! There's a huge gray-market industry in Europe to unlock phones. My gf bought a cool Meteor Nokia phone in Ireland to get it unlocked to use on T-Mobile in the US. Bad idea... After the guy who sells phone accessories in the cart in the middle of the mall screwed up the unlock code 3x, the phone was dead. She then had to mail it to the UK to some guy who reflashes them. Vodafone-IRL phones are just as locked...

    It's not true that vendor-branded phones sold in Europe are unlocked. Throw in a Orange, Vodafone, T-Mobile, AT&T, BT, Meteor, etc. SIM into a locked phone from a different vendor and see how far you get...
  • Apple's viewpoint (Score:3, Interesting)

    by PureCreditor ( 300490 ) on Tuesday August 28, 2007 @04:31PM (#20389627)
    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.

  • by Philotechnia ( 1131943 ) on Tuesday August 28, 2007 @06:13PM (#20390967)
    At this risk of begging for a -1 Troll mod, I really, REALLY hope this doesn't happen. The rich and powerful enjoy their property, and if you think you're going to give that up because the "rabble" beneath them has de facto lost faith in the concept of property, you're sadly mistaken.

    Rather, this sounds like an argument for pushing people into conformity, while they are robbed behind your backs. Convince people that property doesn't exist, and it becomes easy to take it away from them. While the masses will be content with a minimum level of existence - but don't you dare strive for more! - the few will still enjoy the excesses in life. The abolition of property will occur only at the level of appearance, but to sate the greed of those with power, will continue to exist behind the scenes. (Think Al Gore and his power-hungry estates...)

    If society moves in the direction you sense, it will imply a step back towards the Dark Ages, and a return to a feudalistic society. Of course, if the great mass simply desires serfdom...

    Socialism, FYI, is a poor, poor application of Marxism. My take on Marx is that he believes in and advances the idea that individuals to be the direct owners of their creative forces, i.e. labor. Marxism, in a sense, is a fundamental SUPPORTER of property rights - you own your work, and no one else can or should exploit that! Every management salary that gets paid is, in a sense, benefiting in part from the productive labor beneath them. To simplify, a worker may give $100,000 of annual value to a company, but they actually receive $50,000 in pay, while his manager gains some benefit, as does the owner/stockholders.

    In order for such a structure to exist, it does become apparent that the idea of a company most be rethought, that private ownership is in some sense anathema to Marx, because the idea of an owner that takes no benefit for himself makes no sense. Ownership at the level of the worker would imply some sort of management by election, a sort of executiveless entity that makes decisions through the majority will of the collective. Again, though, in a sense this is the same spirit that gave birth to America, and this concept simply means the democratization of the corporate world. However, the concept of property remains intact in that people own their labor, and the results of that labor. In fact, the concept of property might be brought into further clarity and focus if thought of this way. The change is a move from the idea of property as the apprehension of an external physical object, to the idea of property as an externality with its source found within the forces of the productive individual. Property as external object would still exist, but would be intrinsically tied to the individual. I would argue this is as relevant to physical things as it is to information.

    That's the problem with American consumerism, really. It's not that we consume too much. It's that we've created this schism between property and self, instead of having an integrated view where property extends from my personal productivity and is an extension of myself. But then, I come back full circle, because I think the richest and most successful do have this viewpoint. Information does pose a problem, in that information is incredibly difficult to exploit when information can be transfered as easily as it can today. But consider - I have a piece of information on nuclear engineering because I found it on Google OR I have a piece of information because I studied nuclear physics for many years, became intimately familiar with the rules and laws that govern the field, and understand that information in an almost epiphanal quasi-enlightenment. The value of information is determined by the holder. And THAT moves towards what is for some a very uncomfortable alliance between knowledge and a Marxist view of labor/property...

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