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Apple Selling Unlocked iPhones in U.S. Online Apple Store

Last week, PCMag.com editor-in-chief Lance Ulanoff weighed in on the question of whether Apple was about to release unlocked iPhones in the U.S. market, claiming authoritatively, “Apple won’t do it.” The next morning, Ulanoff admitted on Twitter that “I must eat my words,” as the company did exactly what he claimed it wouldn’t.

An unlocked iPhone, briefly, is a model that is not tied to a particular wireless carrier, but can be purchased without contract or commitment, and can be used with any compatible carrier of the owner’s choice. For the iPhone’s first few years, U.S. customers could purchase only iPhones tied to AT&T’s network. The iPhone models Apple added this year for use with Verizon Wireless can be used only on that carrier’s network. In fact, although AT&T and Verizon Wireless use incompatible technologies for their cellular networks, the GSM iPhone model designed for AT&T and most other carriers worldwide could work on the U.S. T-Mobile network if the phone weren’t locked, and the CDMA iPhone model designed for Verizon Wireless could work similarly on Sprint’s network in the United States.

Apple slipped four new models of unlocked iPhone into the online Apple Store: 16 GB and 32 GB models of the GSM iPhone 4, each in either black or white. Apple says the phones can be used “on the supported GSM wireless carrier of your choice, such as AT&T in the United States.” (While T-Mobile does use GSM technology, their 3G implementation uses a different frequency than AT&T’s, limiting the data throughput on an iPhone when used on their network.)

It’s important to note that an unlocked GSM iPhone still can’t be used on the Verizon Wireless network or other CDMA-based cellular network. (Some recent speculation has suggested that the Qualcomm chipset of Apple’s CDMA iPhone for Verizon Wireless could actually also support GSM carriers, and that an unlocked iPhone was coming that could be used on either type of network. I’m not surprised that didn’t happen.)

The biggest advantage we see for consumers is that an unlocked iPhone can be readily switched between carriers when its owner travels around the world. For GSM phones, all you need is a SIM card provided by your carrier of choice. (CDMA iPhones don’t use a SIM card, and no unlocked version is available at this time. In general, CDMA carriers in the United States have been reluctant to allow unlocked phones on their networks.) An unlocked iPhone should let consumers buy pay-as-you-go voice and data service for overseas visits, or save money by opting for cheaper plans from carriers who don’t need to make back the hundreds of dollars of outlay from subsidized phones.

As Ulanoff reasonably pointed out, there are good reasons for Apple to have avoided this move: It’s potentially more confusing for consumers, who mostly don’t want to have to shop for a carrier and a phone separately; and without the subsidy U.S. consumers are used to, the iPhone appears unattractively expensive. The 16 GB models cost $649, and the 32 GB models are $749, compared to the $199 and $299 prices for the equivalent models tied to AT&T and Verizon Wireless.

There’s enough demand for unlocked phones, though, for global travelers as well as consumers who prefer not to be tied down to particular carriers, that we figure Apple decided to take advantage of the end of its exclusivity arrangement with AT&T to make these phones available to those who decide they’re worth the unsubsidized price. Plus, it may cut down on jailbreaking, the prevalence of which Apple would undoubtedly prefer to reduce.

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