When Steve Jobs first ambled onto the stage at MacWord 2007 and announced Apple’s first steps into the Smart Phone market, he changed the world. It was more than just a change of how people communicated, played games, accessed the Internet, accessed their personal information, and took photos. He reinvented two existing industries and gave rise to two additional, new industries, which have since generated billions of dollars in revenue.
The reinvented industries are evident: phone repairs and accessories. These industries have been familiar faces in the mobile phone world since they were first launched but were reborn with the release of the iPhone.
One of the new industries is also obvious. The iPhone apps market turned over a whopping $15 billion dollars in 2014, which was up from $10 billion in 2013. The other “new industry” was less obvious. That is, the industry of iPhone unlocking.
iPhone unlocking is the process of breaking the carrier restrictions placed on the iPhone so that it can be used with any carrier, anywhere in the world.
When a person signs up for a phone contract with a carrier such as AT&T or Sprint, the iPhone will be locked to that carrier. The customer won’t be able to use it with a competing phone service provider. The customer can’t take the AT&T phone to Verizon. The customer can’t take the Sprint iPhone to Cricket. The iPhone simply won’t work on the phone service of the other provider. The customer can only use it with the company with whom they originally signed a contract. So, to re-iterate, iPhone unlocking is the process of removing this lock, so the customer can choose which mobile service provider they use with their iPhone.
Unlocking iPhones had been legal, but very difficult to do in the US since the iPhone’s launch. Mobile service providers had no legal obligations to unlock the iPhone, even after the contract was finished.
Even though the service providers could choose whether or not they unlocked their customers’ iPhones, the majority of the time, they declined. If the iPhone remained locked to them, it meant the customer had to continue to use the provider’s services as the phone simply wouldn’t work on another carrier, in that locked state.
In October 2012, a language loophole in the DMCA act that made iPhone unlocking legal was closed, meaning that now, regardless of how cooperative the mobile service provider was, they legally couldn’t unlock the iPhone.
Many people shared the thought that the law didn’t seem quite right, asking themselves, “Why would it be illegal for me to take a phone that I legally own to another carrier of my choice? That doesn’t seem fair at all!” In fact, more than 114,000 people signed a petition questioning that very law.
On August 1st, 2014, the Obama Administration agreed with the people, passing the Unlocking Consumer Choice and Wireless Competition Act. This bill makes it easier for consumers to move between carriers to get a better and more suitable solution for their needs. Here is a direct quote from macrumors.com, regarding this bill:
“The bill not only restores the rights of consumers to unlock their phones, but ensures that they can receive help doing so if they lack the technological savvy to unlock on their own…The most important part of this joint effort is that it will have a real impact. As long as their phone is compatible and they have complied with their contracts, consumers will now be able to enjoy the freedom of taking their mobile service — and a phone they already own — to the carrier that best fits their needs. At a time when partisan gridlock all too often threatens progress on everyday issues that matter to consumers, working together we listened to your voices, and the American people benefited as a result.”
While this is great news for consumers, it threatens to destroy the unlocking industry. Before the introduction of this legislation, the process of IMEI unlocking was the iPhone equivalent of buying Cuban cigars in the cold war. In many cases, iPhone owners performed the task themselves, but for those who did not have the technical expertise, it was a case of “knowing somebody.”
The owner of the iPhone needed to know a guy, who knew a guy, who had a friend who was connected to someone, who could get it done. In this case, “getting it done” meant having access to the iPhone IMEI database rather than smuggling crates of rolled tobacco leaves to the mainland (in reference to the “Cuban cigar” analogy).
If the customer was not fortunate enough to have the technical expertise themselves, or to be connected through four degrees of separation to a shady guy in an overcoat who could hack the phone company’s databases, there was another option. That option was to enlist the services of a company (a.k.a. “unlock provider”) that basically performed the same task, having the same type of connections and access to perform the unlocking task.
Now, since the Obama Act, things are different. All that’s required is good standing with the phone service provider (i.e. no outstanding debts and a completed contract).
The unlock providers that manage to survive the AT&T unlock crisis of 2013 are taking big hits.
“Sales are down by as much as 40% on this time last year and aren’t showing any signs of improving anytime soon,” reports Steven Carlson of iUnlockExpress. He continues, “We’ve been in business for seven years, and I don’t know if we’ll survive to see year eight.“
Does this spell the end of the iPhone unlocking industry? It’s impossible to say right now. Third party iPhone unlocking is still necessary for anyone who has contract difficulties, financial problems, or is just facing an unreasonable service provider. Only the future will tell, on whether the unlock providers can survive.