iPhone 'unlockers' threaten O2 deal

Last Modified: 19 Sep 2007
By: Ben King

O2's expensive deal with Apple to sell the iPhone in Britain only makes sense if it can remain the exclusive provider of the coveted gadget.

But iPhone fans are already discussing ways to unlock the iPhone and connect it to a different, less expensive network package.

In O2's own stores and Carphone warehouse dealerships, the iPhone will only be sold with an 18-month contract.

Unlocking requires some technical skill, but it is well within the capability of much of the gadget-loving crowd who are the device's likely target market.

This brings the buyers' total spending commitment to at least £899, when the cost of the device and monthly payments are combined.

But anyone who buys the iPhone in an Apple store can obtain the device for just £269, without signing up to a contract there and then.

The phone is 'locked' to the O2 network, and cannot be used to make calls or surf the web until it is connected to O2. But in the US many users have succeeded in unlocking the device and connecting it to other networks.

Unlocking requires some technical skill, but it is well within the capability of much of the gadget-loving crowd who are the device's likely target market.

The iPhone is cheaper in the US - just $399, less than £200 - and imported American devices are already showing up in the UK, and on the auction website eBay.

Speaking at the UK launch of the iPhone yesterday, Apple chief executive Steve Jobs (pictured left) was sanguine about the unlocking threat.

"It's like a cat-and-mouse game," he said. "We try to stay ahead. People will try to break in, and it's our job to stop them breaking in."

O2 conceded that it would be possible to unlock the iPhone, but users would invalidate their warranty if they did so. "You're on your own if you do that," a spokeswoman said. "You could end up with an expensive brick."