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iPhone Unlocker Throws Brick Back at Apple

By Chris Maxcer MacNewsWorld ECT News Network
Oct 9, 2007 9:44 AM PT

The ability for a consumer to unlock a phone and use it on any wireless service provider network may get a serious shot in the arm if a California man and his class action lawsuit attorney have their way.

iPhone Unlocker Throws Brick Back at Apple

Timothy Smith, represented by attorney Damian Fernandez, has filed a suit against Apple in Santa Clara County Superior Court. The catalyst for the lawsuit is Apple's recent iPhone software update, which turned Smith's iPhone into a so-called iBrick.

AT&T is the exclusive carrier of the Apple iPhone, and in order to use the iPhone, most consumers must sign a two-year contract to use AT&T's wireless network. However, using an easily available software program, a consumer can unlock the iPhone and use it with another wireless service.

Ever since the iPhone's debut this summer, technology enthusiasts, organized loosely as the iPhone Dev Team, have been trying to hack and modify it. They, along with other groups and individuals, have succeed in a variety of different ways. Some methods require dismantling the device and soldering components back together, while other hackers were able to provide software downloads that achieved the same ends without invasive surgery.

A customer with an unlocked iPhone can then go around using another network such as T-Mobile, something Apple discourages and AT&T abhors. Of course, technology-dependent services like visual voicemail wouldn't necessarily work with a non-AT&T service provider, but the core functionality of the iPhone would work fine.

That is, until one tries to install an iPhone software update from Apple. The update distributed two weeks ago rendered many hacked iPhones useless, basically turning them into useless hunks of plastic -- in other words, iBricks.

Perfectly Legal

For consumers, unlocking an iPhone -- or any cell phone for that matter -- seems to be perfectly legal under a 2006 exemption to the federal Digital Millennium Copyright Act of 1998 (DMCA), which appears to give consumers the right to unlock their cell phones to switch to other cell phone carriers -- at least, as long as the unlocking doesn't infringe on the copyright owner.

The Register of Copyrights, according to the lawsuit documents, states that "the access controls do not appear to actually be deployed in order to protect the interests of the copyright owner or the value or integrity of the copyrighted work; rather, they are used by wireless carriers to limit the ability of subscribers to switch to other carriers, a business decision that has nothing whatsoever to do with the interests protected by copyright."

So, the legal basis for unlocking an iPhone in the United States is at least free of issues with copyright, but just because someone can legally unlock an iPhone -- or any other cell phone -- doesn't mean that a company is required by the DMCA to continue to support it or even provide an easy way to unlock it.

Furthermore, the issue could be clouded by modifications made to the iPhone beyond unlocking. The installation of third-party applications could cause problems with software updates, which could also turn an iPhone into an iBrick. Not all modified or unlocked iPhones have been rendered useless.

The Smith lawsuit, for its part, focuses on unlocking rather than modifications, and it all comes back to business issues surrounding antitrusts.

Artificially Inflated - and Unfair - Prices

Smith's argument focuses on California's Cartwright Act, Unfair Practices Act and Unfair Competition Act. Basically, because Apple has an exclusive deal with AT&T, Smith claims he is injured by artificially inflated prices because there is no other carrier who can sell the iPhone or provide it with service. In addition, California has some laws around tying one product to another -- for example, the purchase of an iPhone with the purchase of an AT&T service contract -- that can also be considered illegal if there's sufficient market power at hand.

Because the iPhone doesn't appear to be subsidized by AT&T, Smith claims, locking a consumer into using AT&T's service, regardless of the agreements between AT&T and Apple, doesn't appear to give AT&T a right to recoup its device cost through monthly service fees. Most cell phones in the U.S. that are sold to consumers are subsidized by cell phone companies.

Bigger Issues Abound

Even if Apple is found guilty of monopolizing the "iPhone market," there are bigger issues for American consumers and technology enthusiasts alike.

"The reverse engineering and modification of existing products is an important part of the cycle of technological innovation. Smart manufacturers encourage and explicitly facilitate the modification of their products by users, but unfortunately some vendors do not believe that people should have control of the technology that surrounds them," Peter Eckersley, a staff technologist for Electronic Frontier Foundation, told MacNewsWorld.

"Many parts of the law -- such as copyright -- give users legal rights to defend themselves against those kinds of anti-innovative and anti-competitive policies," he noted.

A Change at Apple - or the Industry?

"Regardless of whether Apple turns out to be legally required to provide this [unlocking] service, they should certainly be making an effort to help the iPhone modification community. They should be documenting their APIs and firmware changes so that the community modifications and Apple's updates can coexist peacefully," Eckersley said.

"Reports to date suggest that they are doing precisely the opposite. If Apple had cared in the slightest to allow any user or third-party improvements, they could have done so. Either Apple specifically intended to break these liberated iPhones, or the present mess is a result of their general policy of programming the device in darkness, with as many software tripwires as possible, to frustrate innovation," he added.

The Size Is Unknown

The number of consumers affected by the alleged iPhone issues is unknown, according to court documents. As evidence of the large size, the lawsuit cites a post from The Unofficial Apple Weblog, which says that the iPhone Dev Team estimated that several thousand iPhone customers have unlocked their iPhones. Doing the math, using the 1.28 million iPhones the Smith lawsuit believes have been sold thus far, this would mean that at least three hundred thousand of them have been unlocked -- more than 23 percent.

"I'd be surprised if it was over ten percent, as most folks don't like to mess with their electronics this way," Rob Enderle, principal analyst for the Enderle Group, told MacNewsWorld. "The reason it might be as high as 10 percent is that folks really don't like Cingular [AT&T] and may be more motivated than most to switch to T-Mobile as a friendlier carrier. Twenty-three percent seems way out of line, given the target audience for these things and the cost of getting it wrong."

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