Contracts even with unlocked phones: Or, why I bought an iPhone

Passing of the torch: here are my iPhone 3G and me in the eyes of my retired HTC Touch, now reduced to life as a Chinese dictionary.

(Credit: Graham Webster)

All year, I've been using an HTC Touch as my telephone. But now, having just moved back to the United States, I found it so hard to get a reasonable deal for service with this unlocked GSM smartphone that I decided there was little reason not to get an iPhone.

This was not an easy decision. I'm about to begin life as a graduate student, so money will be tight. I already had a pretty decent smartphone, which I'd bought in China because it was Windows Mobile and could run Pleco, the undisputed master of mobile Chinese-English dictionaries.

And I was nervous about the iPhone 3G, despite its superior aesthetics and preferable interface, having heard so much about performance problems. For a few reasons, I decided to go with iPhone anyway.

The primary reason is that AT&T and T-Mobile, the main GSM carriers in the United States, did not seem to want to give me a no-contract plan with a good data option. Both wanted a two-year contract just for opening the accounts, according to their Web sites. I had assumed one could just bring in a phone and go month to month.

The U.S. carriers seem to be using a tactic that Beijing-based tech industry consultant Mark Natkin said is the favored strategy of Chinese carriers to retain customers. Rather than lock the phones, which would be easily unlocked in Chinese electronics markets, providers are requiring contracts for decent services. Responding to my speculation on whether China Mobile iPhones will be unlocked, Natkin, who is managing director of Marbridge Consulting, explained:

Rather than locking phones, China's operators have been moving increasingly towards locking customers into a long-term contract that comes with a phone sourced by the operator. In San Francisco, a quick walk down Market Street from the AT&T Wireless store, you can get your mobile phone unlocked for $20 in about 10 minutes. So in China, where the labor is much cheaper, not many phones would stay locked unless the SIM card was fully embedded.

The fact that this tactic seemed to be in action in the U.S. made it only slightly more expensive for me to get an iPhone, so I went for it.

This could foretell a model for Apple to end its devotion to single carriers. If Apple were willing to let multiple mobile companies sell the iPhone and provide service for it in the United States, each company could sell them at a price like the $200 to $300 we see for the 3G and nail us with high-priced data plans. Especially if users wanted to use services like MobileMe's push e-mail feature (supposing it were to work), there could be specific, iPhone-only plans. Why can't this be done with multiple carriers?

This model wouldn't be new. The same phones have been available at multiple carriers for many years. They are sold at below-cost prices and the carriers make up for that with service contracts. What I want to know is:

• Why do we need to lock phones if we can lock users into contracts?

• If my phone is locked to your expensive service, why do you need to nail me with a contract?

Couldn't the industry get along with one or the other coercive tactic?

[peterthepen]

Re: "Does Apple sell unlocked iPhones anywhere on Earth? If so, I want one." in your article "Will iPhones via China Mobile be unlocked?" (July 2, 2008)

Yes, iPhone 3G sold in Hong Kong are all unlocked because of the local law: "In Hong Kong, carriers are not allowed to SIM lock a phone for the purpose of SOLELY tying customers to their network." http://en.wikipedia.org/wiki/SIM_lock

However, no one could get an iPhone without first paying US $600 for 8G or US $700 for 16G; depends on the service plan you choose, in the end of 24 months the iPhone could be have as little as US $ 0 for the 8G or US $17 for the 16G.
http://iphone.three.com.hk/website/en/iplan.html

[gwbstr]

@peterthepen

Thanks for this information! I did not know the details of Hong Kong's offering, and this is definitely interesting. I'll be doing a post based on this soon!

Graham/Sinobyte

[jerrybrown]

Graham, same problem. I had an unlocked HTC TyTN II that I was forced into a two year contract for just to get service. I think it is kind of idiotic. Why can't we do business like adults? This lock-in business really not good for the consumer, no matter what the companies say.

[infernalman7]

In Australia, you can request to unlock your iPhone, which is free if you are on the contract. However, it would take them quite a while to process since the carrier has to send IMEI information to Apple and let Apple unlock the phone through iTunes.

[Krumudgin]

Sounds like you should take an economics class. Since "money will be tight" have you considered forgoing the expensive cell phone? Students did quite well in the recent past with a cheap landline (shared with roommates) or use Skype. Hmmm, do you have cable TV, large flat screen TV, go to Starbucks for $4 coffee (perhaps a cookie, and a coffee to go), drive a car, new computer, a nice stereo, live alone? How many credit cards do you have and how many have revolving debt? You wrote this article because you had to have those so called "decent services" for your cell phone. Time to make friends with a lawyer in that grad school as I see foreclosure or bankruptcy in your future, as with so many others that can't control their spending urges.

[ewsachse]

@Krumudgin

Awesome. My thoughts exactly. This guy is taking classes overseas, but is so concerned about having his little toys to play with.

Plenty of us graduated college before the existence of cell phones, PDA's and all these other useless toys. A calling card works great, and a good old "black book" is an affordable alternative to store phone numbers.

[Constable Odo]

I believe that France and Belgium also offer unlocked iPhones due to laws in both of those countries. You do have to pay a higher price for the phone, of course.

[gwbstr]

Thanks for the lovely comments, Krumudgin and ewsachse. The difference between graduating from college before the existence of these things and working as a journalist, researcher, and student in a 24-hour media environment should not be too hard to understand.

I'm not responding just for fun. I think the investment in productivity will pay off in real monetary terms and will make my graduate school life MORE affordable. When life includes a busy course and work schedule, and revenue is still available without much trouble through timely response to news events, a small hardware and service investment is worth it. Meanwhile, there will be no home phone in my shared apartment, nor will there be need for cable TV since the video I need is online and often accessible from my phone. There would be no TV at all if my roommate didn't already have and old one. And I delight in making my own coffee, which is better than Starbucks.

Meanwhile, go ask any journalist under 30 if their job wouldn't be easier and more productive with mobile e-mail. They'll likely at that point pull out their Blackberry. Many folks who don't want to use technology at work in media are facing buy-outs and layoffs, even in what were the cushiest jobs.

Graham

[gwbstr]

Thanks for the lovely comments, Krumudgin and ewsachse. The difference between graduating from college before the existence of these things and working as a journalist, researcher, and student in a 24-hour media environment should not be too hard to understand.

I'm not responding just for fun. I think the investment in productivity will pay off in real monetary terms and will make my graduate school life MORE affordable. When life includes a busy course and work schedule, and revenue is still available without much trouble through timely response to news events, a small hardware and service investment is worth it. Meanwhile, there will be no home phone in my shared apartment, nor will there be need for cable TV since the video I need is online and often accessible from my phone. There would be no TV at all if my roommate didn't already have and old one. And I delight in making my own coffee, which is better than Starbucks.

Meanwhile, go ask any journalist under 30 if their job wouldn't be easier and more productive with mobile e-mail. They'll likely at that point pull out their Blackberry. Many folks who don't want to use technology at work in media are facing buy-outs and layoffs, even in what were the cushiest jobs.

Graham

[idfubar]

If your main reason for having a phone (rather than some other mobile device) is to make phone calls then you could very easily sign up for a pre-paid phone plan; many carriers offer a pre-paid plan which is identical (from a network access perspective) to a subscription/contract service. I would also venture to say a pre-paid plan (assuming you don't make that many calls) would not only be cheaper but offer you all the same features (i.e. mobile data) as well.

[templetonrl]

I guess you did not check TMobile for their fair and flexible plans. These are the same as the post paid plans but require payment in advance but have no contracts. I have them charge my prepaid credit card every month so there is no hassle.

[professionaladventurer]

Why does Cnet post a stream of conciseness for some grad student who moved back to the states and his hard decision to purchase an iPhone? Why did I read it and post a comment?

[harveyelmore]

Maybe I am confused. Go get the cheapest or free AT & T phone with $15 media service and modest minutes then switch your sim card into your other phone?