Let's look at it this way. The 3g iPhone comes out. AT&T offers a $200 subsidy to anyone who purchases and activates with a 2 year contract. The 3G iPhone (to work on ATT) operates at a 1900 Mhz frequency. T-Mobile (the only other 3G carrier in the US) operates at 2100 Mhz frequency, making the 3G part of the 3G iPhone completely useless to anyone in the US not with AT&T. Therefore, anybody with an iPhone right now could sell their iPhone unlocked to T-Mobile users for up to $350 (the only way T-Mobile users could get an iPhone would be to pay $400 at the Apple store, so this is a deal for them), renew their contract, and get a new iPhone for $200, profiting $150 in the end. Stuff like that would run rampant. Apple does not want to create that kind of resale market. And they don't want the iPhone to be devalued.