Why iPhone is locked to AT&T in the U.S. ?

Discussion in 'iPhone' started by dannysiu, Sep 9, 2010.

  1. dannysiu macrumors newbie

    Sep 4, 2010
    This looks like a stupid question.

    But in Asian countries like Hong Kong, China, Singapore, Thailand etc, people typically choose from hundreds of models of handsets of any brand, and even phones not even officially released in that country.

    They then spend a few bucks on a SIM card and is free to dump the card and switch to a different carrier the next day, for the cost of the SIM card only. These prepaid or non-commitment postpaid SIM cards come with many different options of data/voice text for different demands.

    People simply don't have to buy a cell phone from a carrier. And it's free of any commitment. (There are Best Buy in the US, but there is no difference from buying an iPhone at Best Buy or from a carrier)

    iPhones sold in those countries are also officially unlocked.

    Why the US carrier can force you to have a two year commitment, if you simply want the handset?

    What happens if you are a frequent world traveler and do not like the international roaming charges? What if you simply want your iPhone and want to insert a local SIM card whichever country you go to, for reasonable local rates? That's simply impossible in the U.S.
  2. Applejuiced macrumors Westmere


    Apr 16, 2008
    At the iPhone hacks section.
  3. Lefty29 macrumors newbie


    Aug 2, 2010
    Carrier subsidized phones

    The basic answer is carrier subsidized phones. In the US, the consumer is partially to blame since they are always demanding cheap phones (especially smartphones) and are willing to sign a 2 year contract to get one. iPhone is a perfect example since with a new 2 year contract you get get it for $199, but without a contract (not even really an option here in the US), it would cost you ~$1000. While in the end, its pretty much proven that the "cheaper" phone is an illusion (when you take into consideration an expensive 2 year plan), it probably won't end anytime soon.
  4. hcho3 macrumors 68030

    May 13, 2010
    Useless thread...
    Iphone 4 is exclusive because apple and AT&T signed an agreement. Move along.
  5. trekkie604 macrumors 65816


    Feb 25, 2008
    Vancouver, Canada
    Here in Canada we have the option of buying an unlocked iPhone 4 from Apple costs $659. But the sticker-shock of that price will entice people to sign a 3 year contract to get the same phone locked to the carrier for $159.

    Different cultures.
  6. Fernandez21 macrumors 601


    Jun 16, 2010
    In the us there are not that many gsm carriers, and only two national gsm carriers(AT&T and tmobile). You can buy a phone without contract, but because of the different technologies you have a very limited amount of carriers where it would work, even the gsm carriers use different frequencies so an unlocked iPhone won't have 3G service if used with tmobile. Because there are so few choices, people don't bounce around from one carrier to another that frequently so they sign two year contracts to get the phone cheaper, since the plan price is the same no matter what. Because of this two year on contract model carriers pay manufacturers to get exclusive deals on handsets and there for those handsets are locked to that carrier. On most gsm handsets you can get the unlock code after having service for a couple of months (except for the iPhone) however with the CDMA carriers even if you get the phone unlocked, there is no guarantee another CDMA carrier will accept that handset, most of the time they make up some bs of the phone not being in there system and so you have to buy another handset with them.

    There are just too few carriers with over lapping technologies to warrant paying full price on a phone. In my area I have five carriers, two gms carriers but using different 3G frequencies so I would need a different phone to use 3G if I switch, there are 3 CDMA carriers but trying to get 2 of them to accept a phone that isn't from them is a pain, and the 3rd will actually accept any compatible phone but they have pretty lousey reception in the area. So even if I were to buy an unlock phone, I would really only have one choice depending on what radios are on that phone.
  7. Meyvn macrumors 6502

    Feb 3, 2005
    1. Apple & AT&T have a (currently) mutually beneficial exclusive contract.

    2. AT&T outright pays for part of the cost of YOUR iPhone if you buy one, in order to get you on the 2-year agreement with them.

    3. It would actually require Apple to develop a phone with different cellular technology inside it for it to work with other carriers. Current iPhones will work for calls and 2G internet on T-Mobile, but not 3G, and they won't work *at all* on Sprint or Verizon, even if they are unlocked. By contrast, most other countries around the world use GSM and AT&T-style 3G almost exclusively, so unlocking an iPhone and using it in those countries is easy.

    Our entire cellular infrastructure is just fundamentally different. Perhaps when we have good enough, widespread enough wireless internet accessible everywhere, with enough competition to drive the prices down, people will just start using mobile phones with VoIP, forcing our current carriers to be a little nicer to us.

    I'll tell you, if a company like Clear could adopt an iPod Touch case with an embedded Clear antenna device plus a built-in microphone, like those companies that make extended battery cases, they might really have something going for them. Say, offer an iPod touch-only service, $30 a month, then just $3 a month for unlimited US & Canada Skype minutes.
  8. dannysiu thread starter macrumors newbie

    Sep 4, 2010

    At least you have the option. but in the US, people don't.

    And, in those Asian countries, where more people opt for the non-subsidized option, I believe the situation has led more fierce competition among carriers, since consumers may switch to other carriers any time, plus, more choices of handsets. In addition, carriers in those countries also offer the contract option like their US counterparts. So at the end of the day, it is the consumers who benefit from such competition and choices. And you are free to make your choice.

    In the US, if you want your iPhone but has to travel to other countries, you end up either paying AT&T a huge fine, or getting a heartbreaking international roaming bill, not to mention the difficulties of using a US number in a foreign country.
  9. TheConfuzed1 macrumors 6502a

    Jun 4, 2003
    This is actually quite simple.

    The contract with AT&T was the very first iPhone contract.

    Apple was a new player in the market, and they had a lot of demands.

    AT&T took a big risk, upgrading their infrastructure for Visual Voicemail, sharing profits, etc.

    That kind of compromise doesn't come cheap.

    In this case, it resulted in a five year exclusive contract.

    I remember Steve saying at the original Macworld debut that it was a five year contract, but all evidence of that seems to have been removed. Very strange.

    Every carrier that signed a contract afterward had AT&T's success as a basis of what to expect from iPhone, making them less leery to make the necessary upgrades, while at the same time giving Apple leverage to lessen the exclusivity.

    AT&T's contract is about to expire. It's only a matter of time until the iPhone begins to appear on competing US networks.
  10. TheConfuzed1 macrumors 6502a

    Jun 4, 2003
    The illusion is thinking that paying for the unsubsidized iPhone will save you money.

    You can't use the phone without a network.

    Personally, I know that I will continue to have a phone for the forseeable future, so the contract is no big deal for me.

    If you don't think you can commit to two years of service, then don't buy a subsidized phone. Of course, if you aren't going to keep the phone for that time I certainly wouldn't buy a new iPhone (or any other expensive phone).

    Either buy a cheap phone, or a used iPhone.
  11. barkomatic macrumors 68040

    Aug 8, 2008
    I don't mind the contract itself--its the fact that the iPhone is *locked* to AT&T exclusively as well. I'm more than willing to fulfill a contract since, as you say, one has to have a carrier to use the phone anyway.

    However, I don't understand why the phone has to also be locked. If I travel to another country for a week I'd like the option of being able to pop in a local sim to use my phone while I'm there--even if I am simultaneously paying on my domestic contract in my home country.

    Of course, its really a collusion between carriers who want to charge exhorbitant international rates.
  12. TheConfuzed1 macrumors 6502a

    Jun 4, 2003
    I agree that it would be much better if the phone were to be sold unlocked.

    They don't disclose the details of their contract publicly, but I'm sure we have the contract between Apple and AT&T to thank for that.
  13. mlts22 macrumors 6502a

    Oct 28, 2008
    Even without being locked to AT&T, you still don't have many choices. In reality, you have two:

    1: Go with T-Mobile who decided to make their own "standard" for 3G radio bands incompatible with everyone else's and have your iPhone run on EDGE.

    2: Stay with AT&T.

    CDMA on the iPhone is just not going to happen, so Sprint and Verizon are out of the picture altogether.

    I can see an unlocked iPhone for traveling abroad so one doesn't have to pay the roaming fees, but it is seriously doubtful that the iPhone will be on T-Mobile, and just will not happen with Sprint or Verizon. Ever.
  14. bstpierre macrumors 6502a

    Mar 28, 2008
    Do other carriers in the US offer unlocked phones?
  15. ToroidalZeus macrumors 68020


    Dec 8, 2009
    BINGO. AT&T took a lot of risk on Apple, risk that even Verizon wouldn't commit to and thus they deserve the benefits, people only using there iPhones on there network.
  16. h1r0ll3r macrumors 68040


    Dec 28, 2009
    Hopefully :p
    Having used my iPhone in several other countries, I can say that the reception quality is far superior than what AT&T offers. Fortunately, my phone is now JB'd so my soul isn't bound to AT&T's outrageous international roaming rates anymore. Personally, I think big cell companies here are just greedy. If they offered a little more flexibility then I think it would go a long way. If I could buy my phone (carrier free) for $700-$800 then I'd do it in a heart beat. (sigh), yeah, maybe one day.
  17. xtend macrumors regular

    Oct 14, 2009
  18. Applejuiced macrumors Westmere


    Apr 16, 2008
    At the iPhone hacks section.
    True, but for using it in the US with Tmobile is still pointless cause we'd be stuck with 2G only, no visual voicemail and many other issues.
    Its good for someone who travels internationally alot. You can also pick up a factory unlocked iphone from Canada or many other countries but JB and unlocking so easy, mind as well get the subsidy out of AT&T for it.
  19. iMacDragon macrumors 68000


    Oct 18, 2008
    But in many countries you can get much cheaper contracts that don't include phone subsidy, aswell as the ones that do include it, giving you a choice.
  20. kdarling macrumors demi-god


    Jun 9, 2007
    First university coding class = 47 years ago
    There was no big risk. That's a myth. Even AT&T has said that they think Apple bent over much further for them:

    The VVM API was fairly cheap to do (and I bet Apple paid for it), and the so-called profit sharing for the first year was simply AT&T giving Apple our monthly customer subsidy stipend. No extra skin off their back.

    The biggest thing that AT&T did for Apple was to waste a few months upgrading their EDGE network to support the first iPhone radio, instead of spending that effort towards 3G as they should've.

    AT&T clearly did very well in the negotiations. If Apple had more leverage at the time, they would've made the exclusive much shorter.

    It's not like AT&T was in a rush to sign with Apple, or vice versa. Even though they knew about the Apple phone idea six months before Apple approached Verizon in summer 2005, AT&T still didn't sign a contract until summer 2006 when Apple was getting desperate for a big USA carrier.
  21. Rodimus Prime macrumors G4

    Rodimus Prime

    Oct 9, 2006

    You need to learn some of the reasons behind T-Mobiles bands.

    AT&T had to requested its 3G frequencies be added to the GSM standard because Verizon and Sprint owned the ones the rest of the world uses. T-Mobile-US had to request that their 3G frequencies be added to the GSM standard as well because AT&T it is using the one frequencies left that it could buy up.

    It has nothing to do with going against standards it is more T-Mobile is doing the best it can with what resources it could get. HSPA+ is a GSM 3G standard and one a lot of the world is switching to. The advantage of it over AT&T is using is that its ceiling of speed is a lot higher so it can use it longer before it needs to require to dump it. Hell T-Mobile can be later to the 4G switch because it will be a while before 4G will be able to push the limits of the HSPA+3G. Until then no real reason to spend the money to make that jump so when T-Mobile US goes 4G they will be buying newer equipment and be able to go faster.
  22. narimonk macrumors regular


    Jul 15, 2010
    Sacramento, CA
    The U.S carrier can tie you down to a 2-year commitment because they essentially own 66% of your iPhone. And they have the right to do that because you as the consumer agree to it when you buy the phone and sign your contract. And if you are an international traveler then maybe the iPhone isn't for you. Instead of spending time blasting AT&T for doing what is their legal right, exercise your right as a consumer and don't buy it if you don't like it. If AT&T sees that this is costing them a lot of business they'll change, it's the beauty of capitalism, rapid change and growth is a necessity. Although I love AT&T to death and would never leave so yeah. :D
  23. mpossoff macrumors 68020

    Mar 21, 2010
    I use skype alot on my iPhone. I have a USA/ Canada unlimited plan costing $15/year and my own skype number that costs $20/year.

    If AT&T offered a data only plan/messaging plan I would jump on it.

  24. mpossoff macrumors 68020

    Mar 21, 2010
    You can get your iPhone unlocked and use it in another country with no problem.

  25. TheConfuzed1 macrumors 6502a

    Jun 4, 2003
    I think so, but I've never needed one before.

    They used to sell the iPhone unlocked for a grip, but I don't know if they still do.

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