How Apple protects new iPhone from unlockers

By Peter Svensson  |   2008-6-13  |     NEWSPAPER EDITION

THE new iPhone and the way it will be sold may shut down a small industry that arose to make the first version available around the world.

The original iPhone, which launched in June last year, was initially available only in the United States and only for use on AT&T Inc's network. In little more than a month, however, enterprising hackers found a way to "unlock" the phone to make it usable on other networks, including networks in other countries.

IPhones soon flowed out of the United States, and analysts have estimated that one-third to one-half of the phones sold never made it onto AT&T's network.

"I saw it in action and I had to have one," said Ernesto Zeivy, a 50-year-old restaurant owner in Mexico City. He had one friend buy an iPhone for him in San Diego for US$500 and another unlock it using software downloaded from the Internet.

Apple announced a new iPhone earlier this week for use on 3G data networks. It will stem the flow of unlocked phones in two ways.

First, the phone will be sold in more countries. Apple added five countries beyond the US for the first phone, but the second one will go on sale in 22 countries and regions on July 11. Apple has said it will add more countries at a rapid clip and reach 70 by the end of the year. That takes away one of main incentives for unlocking.

Second, Apple is abandoning its unusual sales method. Customers could buy an iPhone from a carrier or from Apple without activating it on a service plan, enabling customers to unlock the phones ?? and never sign up with AT&T.

"Anyone can unlock it without paying anyone anything," said Blas Caballero, another iPhone user in Mexico. "It's so easy. A minute and a half, and all you have to do is push a button," said the 32-year-old bar owner in Mexico City. He bought his iPhone in New York.