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Unlocking the iPhone and the Death of Exclusivity

Is it even possible for companies to strike exclusive deals when teams of nerds across the country have been at work on hacking the iPhone since it's release in late June? Engadget declared the Apple/AT&T exclusivity deal dead at noon on Friday, so sorry if this story is a little old, but now that media outlets like Wired, BusinessWeek, and CNN are covering the story, I thought that I should also weigh in.

I don't know if I should view this as good news, bad news, or just another lesson in the folly of trying to lock-out the tech set from something as desirable as the iPhone. Exclusivity deals, from a policy standpoint, are like most any other private, legal arrangement to me—they're perfectly fine. However, the corporate managers of the world may want to start reconsidering exclusivity arrangements that rely on hack-proof tech. Why? Because no such thing exists.AT&T and Apple have so far ignored this story publicly, but privately both have to be fuming. AT&T was obviously banking on the iPhone subscription rates and activation fees, but Apple was also getting a cut of both charges. So, every iPhone that uses the new software hack and goes to T-Mobile (the only compatible U.S. carrier) loses money for Ma Bell and Mr. Jobs.

Does AT&T, Apple, or both companies have a legal case to bring against the hackers? Likely. But will pursuing this in court really amount to anything? Other than shutting down a few websites, no. There should be new aphorism in the digital world: once there's a hack, you can't go back. Then again, most consumers will probably stick with activating the old fashioned way. One more thing to consider: how will this affect U.S. cellular phone business models? If exclusivity becomes impossible, networks will become less device driven and more data-rate driven. This might be a very good thing—making networks one layer of competition and devices another, separate layer. However, technologies like Visual Voicemail (not available with T-Mobile service hack), that involve network or server-side changes, will be harder for device makers to pursue without the leverage of exclusivity. Visual Voicemail is rather simple and likely not all that costly, but future techs that rely on carrier compatibility may need the financial boost that exclusivity provides. While I acknowledge that device locking and exclusivity can be annoying, should we celebrate its demise or mourn its passing?