AT&T loses its cool over GoPhone unlockers
by Chris Ziegler 
posted Feb 18th 2008 at 4:51PM
AT&T's mad as hell that people are buying its prepaid phones in quantity for the sole purpose of unlocking and reselling them, and it's not going to take it anymore. The megacarrier has filed a lawsuit in Texas targeting so-called phone traffickers who are allegedly sending boatloads of people -- "runners" as they're called -- into AT&T's retail locations to pick up GoPhones and circumvent its per-person purchase limits. To AT&T's credit, the DMCA's exemption on phone unlocking doesn't protect those looking to profit from the sale of unlocked phones, so the lawsuit looks pretty straight on the surface; TracFone has made a killing recently in its legal pursuits, and it turns out that one of TracFone's lawyers is involved with AT&T's case, too, so the defendants might be staring down the barrel of a big ol' fine here. Besides AT&T and TracFone, AT&T's court filing claims that T-Mobile, Virgin Mobile, and Nokia (huh?) have all filed similar lawsuits recently, and the legal team promises there are more in the pipe. Anyway, let's try to keep the GoPhone purchases to under a hundred units a day until this all blows over, okay?
Filed under: ATT
Reader Comments (Page 1 of 1)
Gib @ Feb 18th 2008 5:09PM
I didn't realize that here was a huge market for unlocked pre-paid phones...what am i missing out on?
iofthestorm @ Feb 18th 2008 5:41PM
Are these easy to unlock or something? Sounds interesting. Would these work in Asian GSM networks?
Joseph Singer @ Feb 18th 2008 7:20PM
They will only work on Asian networks if they use 900 and/or 1800 Mhz. If it's dual band for North America (850 and 1900) it absolutely will not work anywhere but in North America.
RC @ Feb 18th 2008 6:03PM
I can see why they are upset. They're sold at cheap prices assuming the buyer is gonna use the GoPhone serivce. When they don't use the service, they lose money on the sale of the phone.
Because it's causing AT&T to lose money, I think AT&T will win the case.
vzw gal @ Feb 18th 2008 7:45PM
Yeah, the same argument was made for AT&T when the iPhones were being bought, unlocked, and activated on other netorks - even though it's blatently fraudulent to do as these people are doing, everyone is so caught up in their own "screw the man" mentalities that they can't actually be logical about it.
When you buy a phone in this manner (either GoPhone or iPhone), you agree to abide by a certain set of terms and conditions. To not do so is totally wrong and there's no excuse for it. Just because the company you try to screw is a big company doesn't make it right.
PSM @ Feb 18th 2008 8:21PM
Legally, this is bad.
Morally, my position is that since it's impossible for anyone to screw anyone more than wireless carriers screw consumers, I just can't muster sympathy for anything that happens to them.
CB17 @ Feb 18th 2008 8:22PM
Couldn't have said it better myself...
dennyj @ Feb 18th 2008 9:44PM
at&t is not losing any money from the unlocked iphones because they're not selling it to customers at a subsidized price, the only people losing money from the iphones is Apple because they are not getting they're cut from at&t for each iphone activated on their network.
Sean @ Feb 18th 2008 9:46PM
NARC!!!!!!!!!!
Jamar @ Feb 19th 2008 7:28AM
It's not the subsidies that I have a problem with, it's the fact that American providers are so stingy about them. Remember the 920SH that Softbank released recently? Free with 2-year contract. When AT&T only sells the RAZR for free, a simple comparison will show just how much AT&T is making.
B @ Feb 18th 2008 8:14PM
When will carriers realize that they are only service providers? The sooner they realize this, the better off they will be.
All these stupid locked prepaid, 2 year contracts and retarded downloads just agitate consumers. All we want is freedom and simplicity.
When will a telecommunication company get this message?
Sam Winter @ Feb 18th 2008 8:26PM
@vzw gal
No, you are wrong. These GoPhones are directly subsidized by AT&T and they expect to recover that cost through monthly fees from GoPhone plan subscribers. So AT&T is DIRECTLY LOSING MONEY because of this act.
The iPhone IS NOT SUBSIDIZED BY AT&T. AT&T did not buy the phone from Apple at a higher wholesale cost than they are retailing them for at the store, therefore they are NOT directly losing money on the sale of the device. If someone activates the iPhone on a different network, they are only losing the possible opportunity revenue from the subscriber.
I also think for people who do this it's less about "sticking it to the man" and more about getting a fair deal. Hardware SHOULD NEVER be sold as a package, requiring other service commitments.
In more progressive societies in Europe that care more about the people than large corporations, they do NOT allow this behavior. In America at least, the lobbyists rule the day with their corrupt politician buddies...
totalundone @ Feb 18th 2008 9:04PM
Umm, do you know that the GoPhone service is a prepaid service (ie. no monthly fees)?
I seriously doubt that the GoPhone RAZR V3 is subsidized at 129.99$ It's an old phone with a VGA camera. They might get a discount from the manufacturer but that would be it.
Miya @ Feb 18th 2008 8:48PM
FFS, I wish US carriers could get over this locked phones business and allow unlocked phones to dominate the product line. I think it would fit for a healthier mobile market.
Denny @ Feb 18th 2008 9:52PM
getting your phone unlocked is easy.. its the 2 year contract the carrier sticks you with that is a problem; and without those contracts...it would be a very expensive mobile market.
rpa @ Feb 18th 2008 9:58PM
The telcos will never change their business model of cheap phones and a lock on a 2 year commitment so long as their lobbyists keep funneling money to the politicians to ensure their cartel remains in force. I live in Hong Kong where almost all phones are sold unlocked (GSM). There is complete number portability and REAL competition between carriers. In one of the most expensive cities in the world, I pay about US$13 for 800 minutes (I think....the plan is so cheap, I don't even keep track of it).
illutionz @ Feb 18th 2008 10:20PM
look at asian network... they don't LOCK and specifically BRANDED phone firmware. If you are willing to sign 2 years contract, then you are able to BUY an UNLOCKED phones with a subsidized price... I picked up Nokia N95 Black Edition 8GB as a sidekick of my iPhone for approx 200 USD just because my girlfriend back home was renewing her 2 years contract and she is happy with her current phone (Nokia N81).
I don't understand why people think that if the phone carriers do not LOCK the phones, the price of phones will go up... there are TONS of phones from Nokia, Samsung, Sony Ericsson, Motorola (wait they dont make phones anymore lol) that cost around USD$100-200 unlocked.
These carriers SHOULD be able to sell UNLOCKED phones for a cheap price and subsidize them even if the phones are not LOCKED to their network. If it doesn't make sense to "lock" your kitchen appliances to the utility company, why does it make sense for network carriers to LOCK your phones to them?
Oh yeah I also got free INCOMING voice call, VIDEO CALL, 3G network, and the SMS i received do not count towards my free messaging bucket for the month...
mingkee @ Feb 19th 2008 12:06AM
this is just a starting
next step: at&t and apple will run a GLOBAL LAWSUIT over iPhone ALL OVER THE WORLD, even don't mind to cause another world war
mikeb @ Feb 19th 2008 10:53AM
wanted a new phone didn't want to sign a new two year contract, thus the reason behind unlocking a gophone. What is the use of having a SIM card in GSM phones if you can't use it in another phone ?
jesson.stephen @ Feb 19th 2008 1:07AM
The iPhone is the only phone sold above cost to the consumer in the US market. Apple cost is $292 per unit. Bundling was put in place to subsidize cellular phones.
AT&T & Apple are making a profit on the iPhone at $399.00. None of the 'resellers' are unlocking the phones, they are exporting them locked, sealed, as is. Get a clue. Ebay bozos, are not resellers.
AT&T's competitors are buying the phones thousands at a time for $700 a piece. They are subsidizing them in their markets.
Remember, 30% of the phones in France are beings sold at $1150 USD legaly, and Apple is laughing all the way to the bank.
2 million phones with $107 profit per phone at retail is $214,000,000.00 on these (losers), I bet Motorola or Sanyo investors would be pretty happy about those numbers...
Jobs and Apple have created DEMAND MANIA.
He is a genius and you guys are lapping it up like dogs.
You think he hasn't thought every in and out of this out?
Oh, ya, right, this all just happened.
I think Steve is ten steps ahead of us all.
Gopi Flaherty @ Feb 19th 2008 1:57PM
The $292 cost you mention is an estimate of the parts cost, from a third party. It isn't necessarily very accurate, and it does not include the software cost or any R&D.
I think it's quite inaccurate to suggest that the iPhone is unquestionably un-subsidized because of the component cost. From what I have read of the development process, Apple went through a lot of revisions before they shipped - revisions that, based on the bugginess of the other smart phones I've used, would've actually been sold to customers by other companies.
As to whether he's thought every detail out, he's made some mistakes. The trashing he got from the development community when he described AJAX-based stuff as "sweet" at WWDC was ferocious. The whining and complaining about the $200 price drop took him by surprise. Jobs is good but he's not perfect. Part of the reason that Jobs is 10 steps ahead of the competition is that much of the competition simply makes stupid mistakes. Every smart phone I've used has had a long list of things that could've been trivially fixed in a few days of the dev team's time. What the competition lacks is somebody with the finely honed berating skills of Jobs to point out their mistakes.
VZW @ Feb 19th 2008 7:25AM
Those GoPhones may be more expensive than what you'd get on a contract, but they STILL aren't full retail (full retail from Motorola w/out a contract on a RAZR=well over $200), but they are losing MAJOR money on the ACCESS COSTS customers pay to be able to talk on those phones - be it iPhones or GoPhones.
With iPhones, only 1/3 of them were activated on AT&T monthly service plans. 1/3! So Apple makes their money on the sale of the phones, but AT&T is losing 2/3 of the revenue it was supposed to receive from those iPhone purchases! How is AT&T NOT losing money on THAT deal?!
...it must be so tiring being such a communist.
Vinay Manayathara @ Feb 21st 2008 9:05PM
moving to asia. you get better phones, faster networks(no crappy EDGE/1xRTT), and all phones are unlocked even if you buy them from a carrier. oh and dont forget that you can get more types of phones too. WHY DOESNT ALL THESE STUPID AMERICAN CARRIERS UNDERSTAND THAT WE WANT FASTER MOBILE INTERNET AND UNLOCKED PHONES(for us globetrotters)!!!!!!