July 09, 2008, 11:57 AM — Now that the iPhone 3G is upon us, I thought it would be a good time to discuss the fact that an unlocked iPhone is probably best for everyone.
Surely some are led to believe that Apple and AT&T would never want out of an exclusivity agreement because, well, if Apple really wanted out, it would have done it already. Based on that (poor) logic alone, some people are justifying the existence of this situation. But as for me, I don’t understand the logic and actually believe it’s a foolhardy notion with no basis in reality.
Here’s why:
The way I see it, the marriage between Apple and AT&T is made in hell. AT&T has consistently solidified its place in the cell phone space as one of the most hated with its draconian policies and downright ludicrous contract that's far too long and far too stringent. On the other hand, Apple has shown that the exclusivity deal was nothing more than a ploy to develop a foothold in the cell phone industry, and now that it has accomplished it, AT&T has become a not-so necessary evil.
And to make matters worse, Apple isn’t getting anything out the deal this time around.
According to most reports, Apple’s arrangement with AT&T has changed since the announcement of the iPhone 3G. Instead of sharing revenue with the carrier, the arrangement looks quite similar to any other deal in the space: the manufacturer sells the phone to the carrier, the phone is deeply discounted by the carrier to entice buyers, and all the revenue from the service is incurred by the carrier. Last year, Apple was enjoying a slice of the pie along with the profits off the sale of the iPhone.
How quickly things have changed.
But now that Apple isn’t receiving any additional revenue from the deal, why would it want to cut out a major portion of the market by staying exclusive with AT&T? Some say that it’s that alleged 5-year deal the companies signed, but I don’t know of one person who actually knows what is in it, so Apple may be able to get out; we just don’t know.
Assuming it can, the iPhone should be unlocked and allowed to be placed on any carrier’s service. It not only benefits Apple – suddenly a major portion of its forgotten customer base is back in the loop – but it also helps consumers who don’t want to join AT&T, but really want an iPhone.
In the United States, that would mean that the iPhone 3G would only be found on AT&T and T-Mobile services at the start, but what’s to say Apple can’t create an iPhone 3G that runs on Verizon’s and Sprint’s networks? Palm and RIM do it, why can’t Apple?
The only loser in this scenario is AT&T. But to be quite honest, I couldn’t care less. The fact of the matter is this: unlocked cell phones should be the norm. And if Apple can lead that charge and make a big deal out of its bid to create an unlocked cell phone industry, the entire landscape would change. Instead of an industry that’s ruled by cell phone companies, consumers will finally lead the charge and wield some power by deciding which service is best for them. And in the process, carriers will be forced to take note.
