iPhone Code Cracked

It took a few weeks, but someone finally broke the code that locks Apple’s iPhone to the AT&T Network. MSNBC is reporting that Greg Hotz, a 17-year-old New Jersey resident, working in collaboration with four Russians, used some software and soldering skills to crack the iPhone network locking code. The upshot is that non-AT&T customers who use GSM networks, which would include those in most of Europe and Asia as well as T-Mobile in the U.S., will be able to use the iPhone if they follow Hotz’s directions, now presumably available somewhere on the Internet. It was only a matter of time before someone managed this, yet that did not stop the hue and cry about the Apple-AT&T exclusivity, which drew fire on the floor of Congress from the likes of Rep. Ed Markey (D-Mass.), who found it appalling that the iPhone only worked with AT&T’s network. Oddly enough, he seemed to view this as a symptom of a monopoly mindset, even though the very nature of his complaint, that non-AT&T customers must change wireless service providers to get the iPhone, speaks to the fact of competition. Hotz, a high school kid, seems to understand the mechanics of competitive market a little better. Asked if his hack may spawn a small industry that may buy U.S. iPhones, unlock them and send them overseas, Hotz replied, “That’s exactly, like, what I don’t want. I don’t want people making money off this.” Although the it may be difficult to get the genie back in the bottle at this point, unlike Markey, Hotz does seem to grasp that there is value in differentiation, and that commercial freedom to create exclusive marketing agreements is what incents the development of cool products like the iPhone.