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Last updated: Wednesday, July 8, 2009

Who really controls your Apple iPhone? If you think you do, think again. AT&T, the U.S. distributor, requires iPhone owners to use its wireless networks exclusively. Those who “jailbreak” their devices and use another carrier void the warranty. Even if you pay full retail ($500 to $700), you still have to agree to use AT&T’s network, or it won’t sell you the device. Subsidized iPhones start at $199 but require a two-year service agreement. As for trying to use your state-of-the-art device to place calls over the Internet, good luck. The iPhone’s Skype application works on Wi-Fi but not on AT&T’s 3G network. Other iPhone apps work on both. AT&T says the block is justified, because Skype is a direct competitor. Customers have two choices: They can suck it up and stay with AT&T, or storm the wall. So far, more than 300,000 iPhone owners are now using T-Mobile’s network and data plans, according to two people with direct knowledge of the situation. Those scaling the wall include owners of the new iPhone 3G S, which hit retail shelves in mid-June. The sources declined to be named because they aren’t authorized to talk publicly about iPhone customers. The Lesson? “Consumers are craving greater control,” says Joel Kelsey, a public policy analyst with Consumers Union. So much, he says, that “they’re willing to risk turning their $300-plus investment into a brick.” The problem for consumers: Carrier obsession with customer control is growing. Profit is the driver. As the USA reaches wireless saturation — meaning everybody who wants a cell phone already has one — carriers have to hustle hard to add customers and grow revenue. The USA (population about 300 million) currently has around 270 million cellphone subscribers. The real pot of gold is mobile data, widely regarded as the next frontier of wireless. That’s why carriers are so hot…

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Some iPhone Owners Chafing at Links to AT&T

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