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Check out the user comments on any mobile phone-related blog or Web site these days; you'll find both success stories and horror stories from those who say they've busted their iPhones out of AT&T (NYSE: T) network prison. The Apple (Nasdaq: AAPL) phone works on this different network, doesn't on that different network, works fine on overseas 3G networks, keeps dropping calls on its original AT&T network (a complaint heard in Austin, Texas, during last weekend's South by Southwest Interactive conference).
The entire smartphone-loving world may be getting ready to find out for itself. A Wednesday item from Boy Genius Report says AT&T is getting ready to follow up on its promise made last summer to offer unlocked iPhones, and the steep prices mentioned then appear to be intact: US$599 for an 8GB model, a whopping $699 for 16GB. The report says existing customers will be able to get the phone with no contract commitments and no in-store activation requirement. One no-commit customer per mobile number, please, according to the AT&T employee education presentation notice that Boy Genius says it has in its hands. Also, the AT&T Data plan must be turned on if the phone will be using the carrier's network.
The Target Audience
When AT&T and Apple made this announcement last summer, the economy was just starting a full nosedive. Now, a recession may put a damper on those who seek full mobile phone freedom. "There's a certain segment of the market, albeit a small one -- but significant -- that wants to be able to buy phones on their own terms," IDC analyst Ramon Llamas told MacNewsWorld. "They say, 'I want this phone right now and I have money to pay for it, period.' Congratulations if that's the way you feel, more power to you. The alternative is, if it's March now and you can wait until September when your contract (with another provider) runs out, you can go to AT&T and sign up for the iPhone 3G as a new customer. At that point, you're paying $199 for the device."
Clearing out inventory in advance of a rumored summer refresh of the iPhone may be the real motive here, Llamas agrees. "But AT&T may also be saying it's time to offer this with other devices they have that are unlocked."
AT&T's Other Motivations
AT&T may also be looking at ways to cut its costs for supporting the iPhone, and could be looking at market research showing 75 percent of Apple phone users like using WiFi networks for data delivery. "The best I can see is, the more savvy users would move their data expenses over to WiFi, but will AT&T allow that?" Michael Morgan, an ABI Research analyst, told MacNewsWorld. "If you're paying extra for the phone and you don't have the contract commitment, now they (AT&T) don't even have to subsidize the phone and you're still on the data plan."
Using WiFi for data also frees up AT&T's cellular networks for voice. Downloading songs and other usage-intensive applications at one of thousands of hotspots -- including those set up by AT&T -- "puts it off of cellular data networks, puts it on WiFi, and helps unclog the networks."
Speaking of networks: U.S. consumers seeking unlocked iPhones must consider what other national networks will support the iPhone. Morgan says the GSM requirements and the limitations of other 3G networks from Verizon and Sprint (NYSE: S) narrow things down considerably.
"There may be some smaller GSM carriers, but it really comes down to AT&T and T-Mobile," he said. "Between the two of them, who's got the bigger network? Who's got better GSM coverage? AT&T wins that battle right off the bat."
