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Summary:

AT&T will begin unlocking iPhones after customers contracts expire, which could potentially flood the market with millions of iPhones just begging for new carriers. There are two operators in particular well positioned to take advantage of that deluge of unlocked Apple devices: H2O Wireless and FreedomPop.

Lots of iPhones

Updated. AT&T said on Friday it will begin unlocking iPhones after customers’ contracts expire, which could potentially flood the market with millions of iPhones just begging for new carriers. There are two virtual operators in particular well positioned to take advantage of that deluge of unlocked Apple devices: H2O Wireless and FreedomPop.

Among the major U.S. operators, options will be a bit limited, since T-Mobile won’t be able to supply any of those devices with 3G of HSPA+ data. The iPhone 4S sports both GSM and CDMA radios, but it’s doubtful Sprint or Verizon will — or even can –activate it on their networks. However, there’s a huge opportunity here for mobile virtual network operators (MVNOs) that resell the carriers voice minutes and megabytes. Most of the MVNOs partner up with CDMA operators like Sprint for their voice and data so unlocked AT&T iPhones will be of little use to them. But H2O, because it resells AT&T’s access, and FreedomPop, because of its unique business model, will be the exceptions.

Let’s break them down one by one:

H2O Wireless

H2O Wireless already has a thriving business selling SIM cards to unlocked iPhone users, the problem is getting an unlocked iPhone hasn’t been that easy. AT&T has kept the devices bolted down since it started selling the original iPhone in 2007, so customers’ only options have been to buy an unlocked version at unsubsidized prices (which can run upwards of $800 depending on the version) from Apple, bring a used device in from overseas, or hacking a locked device.

Update: Some of our readers have pointed out that it is possible to activate the AT&T iPhone on H20’s network even if the phone is locked. Since H2O is an AT&T MVNO, the phone will recognize the network, but while Internet connectivity will be enabled some features like MMS will not.

Today AT&T made it clear that taking the chains off its devices will be a relatively easy procedure. Here’s AT&T’s statement:

Beginning Sunday, April 8, we will offer qualifying customers the ability to unlock their AT&T iPhones. The only requirements are that a customer’s account must be in good standing, their device cannot be associated with a current and active term commitment on an AT&T customer account, and they need to have fulfilled their contract term, upgraded under one of our upgrade policies or paid an early termination fee.

That means millions upon millions of iPhone 3Gs and 3Ges are already eligible. In a few months, a steadily increasing stream of iPhones 4es — which launched in the summer of 2010 — will also qualify for the unlock. And while iPhone 4S customers aren’t even a year into their 24-months contracts, if they’re willing to pay their early termination fees they’re phones will be free to move to other carriers as well.

H2O’s proposition is simple: Pay $60 a month and get a micro-SIM that will fit the iPhone providing unlimited voice, SMS and 2 1 GB of data (it abandoned unlimited plans in November). Since H2O resells AT&T’s GSM and HSPA services, the voice service, data quality and coverage will likely match AT&T’s exactly – for a far lower price.

FreedomPop

FreedomPop’s iPhone play is a bit more complicated, but the potential rewards for customers who sign with it are far greater. Last week we laid out FreedomPop’s strategy in detail – how it plans to turn data into nearly free commodity that customers can earn and trade. One of the cornerstones of that strategy is to provide only data connectivity to smartphones, starting with the iPhone.

When it launches in third quarter, FreedomPop plans to offer a smartphone shell that fits the iPhone 4 and 4S. That shell will connect its resident device to Clearwire’s 4G WiMAX network as well as act as a mobile hotspot. The kicker is FreedomPop plans to give away around 1 GB of data a month for free, and then sell further access at the rate of 1 cent a megabyte.

FreedomPop, however, won’t sell voice service, so unless customers merely want to use their devices us glorified iPod Touches, they will need to buy a voice and SMS plan from another provider. That will be relatively easy to do. FreedomPop customers can buy a voice-only SIM card service from T-Mobile for between $35 and $50 a month. They can also buy a prepaid micro-SIM card from T-Mobile, Tracfone or any other regional operator or MVNO with a GSM network. AT&T could feasibly even offer its own voice-only SIM to former iPhone customers.

Bringing an iPhone to FreedomPop would mean paying two monthly wireless bills, but many might find the savings worth it. A customer could feasibly pay as little as $40 a month to go online with an iPhone using a T-Mobile SIM and FreedomPop’s free gigabyte data allotment.

Feature Image courtesy of Flickr user mikecogh

  1. Jose Herrera Friday, April 6, 2012

    The iPhone can already be activated on H2O without being unlocked. Since it is an AT&T MVNO the phone does not need to be unlocked. The only thing that isn’t working is MMS because the APN settings aren’t editable unless jailbroken. Also, H2O has a $60/month plan that has unlimited minutes, texts and _1_ GB of internet. Red Pocket, another AT&T MVNO, does offer 2GB for the same price though.

    This seems to be better news for T-Mobile and T-Mobile MVNO’s.

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    1. Kevin Fitchard Friday, April 6, 2012

      Hi Jose,

      Thanks for pointing out the 1 GB vs. 2. I looked it up before and thought I corrected before I posted, but I guess not.

      That’s odd that a locked phone would work on H2O. I understand it’s the same network, but the phone is registering to the SIM not the network, right? Is H2O using the same SIMs as AT&T?

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      1. Jose Herrera Friday, April 6, 2012

        Hi,

        Yeah, it used to be 2GB but the company can’t seem to make up their mind.

        As for the sim cards, they are not the same sims but I do not know more on the technicalities unfortunately. I _do_ work at a small cell phone shop though and for locked iPhones with no jailbreak or ultrasn0w unlock in sight H2O and ATT MVNOs are the only option.

        The same thing goes for T-Mobile phones on T-Mobile MVNOs such as Simple Mobile. They do not have to be unlocked. I am currently using a locked T-Mobile Sensation 4G on Straight Talk, for example. (Locked T-Mobile will not work on AT&T MVNOs though.)

        Being able to unlock your iPhone directly from the carrier is a big win for prepaid though. I currently know of no AT&T MVNOs offering true unlimited internet. Prepaid unlimited data for iPhone’s is only possible on T-Mobile, with 2G data. A compromise has to be made.

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      2. H2O’s SIM has the same MCC (Mobile Country Code) and MNC (Mobile Network Code) as AT&T’s. As a matter of fact, all AT&T’s MVNOs use the same MCC/MNC code as the AT&T’s. MCC and MNC is the codes that describe wher a SIM is used and what network the SIm is to be used, and they are stored in a SIM.
        iPhones SIM-locked to AT&T only check if MCC/MNC are for the AT&T, and AT&T and all of its MVNOs have the same value. So, iPhones can not tell if the SIm is from AT&T or H2O.
        That’s why a SIM-locked(to AT&T) iPhone works with H2O’s SIM.

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    2. I have been on H2O for 6 months now. NO need to unlock your phone, just download the h2O app and it will config the phone for you. I had some problems at first, but the past 4 months have been fine. They have scaled the data plan down to 1GB which is BS. I had my SIM cut at a small wireless shop. Also there is NO 3 way calling. That’s a pain, but for $60 I can’t be too upset. Would go back to T-mobile if I could get the 3G though.

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  2. Yes I have a small sell phone shop and what Jose say is true also, you don’t need to unlock the phone just cut to fit the regular H2o or RedPocket Wireless sim card and is done. I have done a lot of iPhones activations and the voice and the text message work the only thing for the Internet you need to down load the company APN and for the MMS you need to jailbreake the phone and install a simple application and it will let you configure the MMS on the phone…

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    1. StraightTalk is also able to get you a micro-sim for the iPhone and is also using the AT&T MVNO/GoPhone mcc/mnc.
      There is an unusual “hack” that allows you to edit the APN settings if you have a non-AT&T sim card handy. Put the AT&T sim in the phone, boot, go to wireless mode, swap sim cards to the one that allows APN editing, go to the screen to edit the apn and without doing anything else remove that sim and put the H2O or StraightTalk (AT&T compatible, specific sim from them) and wait for the SIM to be active again (Searching disappears from the status bar) Edit the APN settings. Exit the APN settings screen. They get saved by the phone … No jailbreak needed to get MMS. You may have to try it more than once, but it usually works first time. The trick is to stay on the APN editing screen and put the H2O or StraightTalk sim in and wait until it is recognized by the phone. And if using StraightTalk ($45 unlimited text, talk, and web with yearly discounts possible) make sure to order (online only not at Walmart) the AT&T compatible micro-sim. And StraightTalk is marketed mainly by Walmart but is a TracPhone brand…

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  3. straighttalk is another MVNO in this field it offers sims from both tmobile and att and has unlimites talk/text/data plan for $45. They have some cdma phone as well which I believe runs on sprint so probably it has contracts with all 3 att, tmobile and sprint.

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    1. I’m using a straighttalk SIM in an off-contract locked iphone 3G. I paid $14.95 for the SIM and ordered it from staighttalksim.com. They offer the standard SIM and the microSIM(needed for iphone 4). I pay $45 per month for unlimited talk, text and data.

      Net10 offers the sim also. Their monthly price is $50 for unlimited text,talk,data

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    2. I’ve been using a Straight Talk SIM in my off-contract locked iphone 3g since StraightTalk started selling SIMs in Feb. It works great. Talk and SMS worked as soon as I activated the SIM and popped it in. For data I had to change the APN settings I need to jailbreak it for MMS,but I haven’t been brave enough to try that yet. Net10 offers a SIM too. Their price is $50 per month.

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    3. I use a Straight Talk CDMA phone which uses Verizon, but their Android phones use Sprint. Straight Talk is only available in Walmart or online.

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  4. i have a small cell phone shop myself. I not think this affects h2o or other MVNOs nearly as much as it affects the exports market. 80% or more of the used I phone I sell or service are being sent to friends/family or as a business venture out of the country.

    the same is true of most other high end GSM smartphones.

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  5. can someone who has never been an at&t customer request the unlock?

    i sell h2o. only a very small number of people are at&t customers switching. the 90% are people who bought a used phone on craigslist, ebay, pawnshop or somewhere else, or they want to buy a phone from me. will i be able to make the request for phones in my inventory or on behalf of my customers?

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    1. Kevin Fitchard Saturday, April 7, 2012

      Good question, Tom.

      AT&T’s statement seems to imply that only the customer who bought the phone can unlock, but it would make sense if a customer sold the phone (and it’s subsidy has been fully paid), the new owner should be able to unlock it. Do you have an old 3GS or 3G in inventory. Might be worth calling AT&T and trying.

      You’ve probably thought about this already, but might be a good idea to only buy phones that customers unlock. I suppose you could test this by inserting a T-Mobile SIM into any device anyone brings in. If it refuses to recognize the SIM than it’s locked still.

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  6. h2o and freedompop are both perfect for ‘locked’ iphones. freedom enables wifi as a substitute for data plan. h2o works great on locked at&t phones, you can even use an at&t sim card with h2o. only the printing on the sim is different. internally they are identical.

    what this is news for are people who want to use carriers like simple mobile who offer everything including unlimited data for $40/month for need an unlocked or locked to t-mobile phone.

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    1. I also heard about this new att mvno called zmart mobile. No need to unlock your iphone and they offer unlimited talk text and 2 GB of full 3G or 4g speeds, unlike h2o which the only first 500 mb is high speed than they pull back tje throttle on the rest of the 1500 mb,of internet for $60 a month

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  7. Why you don’t do you homework before posting anything.H2O the phone doesn’t need to unlocked since is using already the same configuration as att.You can use ATT iphones in any virtual provider that uses att towers.I don’t know what to say people like u that have the opportunity to write in this kind of websites wasting spots that someone with more knowledge could be using.

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  8. talk2jorgelopez Monday, April 9, 2012

    Tmobile supports 1900 MHz HSPA+ now. It is not in all areas but the list is growing. They have been refarming their existing 2g 1900 mhz PCS spectrum and plan on being done by years end.

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    1. Kevin Fitchard Tuesday, April 10, 2012

      Yep, when T-Mobile’s LTE network goes live in 2013, it will be almost exactly in line with AT&T on frequencies and technologies. That means any AT&T phone should work on a T-Mobile’s networks.

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