• Business Week, Tuesday, August 28, 2007 10:32 AM

Hackers have unlocked Apple's iPhone, which means they've discovered a way to open up the $500-$600 device to any wireless network. Bad news for AT&T, which had to fight hard for an exclusive iPhone contract that runs through 2009.

It's not so exclusive anymore. In fact, 17-year-old George Hotz, who claims to be the first person to successfully unlock the device, has just joined a cell-phone refurbishing company called CertiCell, which plans to sell unlocked iPhones. AT&T will no doubt sue the company, but if Hotz and co. can clear up the murky legal air surrounding the practice of unlocking mobile phones, then CertiCell could be at the forefront of a new movement.

Unlocked phones would allow users of T-Mobile USA's network, for example, to operate an iPhone, while AT&T gets nothing. AT&T lawyers are already on the case, trying to pressure hackers to stop unlocking iPhones. However, no one really expects AT&T's legal efforts to deter them, especially now that individual users have the right to unlock their phones under an exemption to the Digital Millennium Copyright Act, implemented last November. The question now is whether it's cool to sell already-unlocked phones.

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