Tech: Is Unlocking the iPhone Legal?

Hackers around the world had one goal this summer: "unlock" the iPhone and allow users to ditch AT&T's exclusive service contract. The glory today goes to George Hotz, a 17-year-old New Jersey tinkerer who logged some 500 hours (and downed a river of energy drinks) to post detailed instructions on his blog on how to liberate an iPhone and operate it on any cellular network. It's an ingenious and fully functional solution, but be warned. Hotz's hack requires a soldering gun and some fairly technical know-how. Apple declined to comment.

While Hotz is the hot topic around the Internet watercooler this weekend, other purely software-based hacks were also being unveiled. One group that claims to have broken the chains that bind iPhone owners to AT&T says they have been ordered to cease and desist by the carrier's lawyers. Uniquephones, a Belfast-based cell phone service that boasts having unlocked phones on more than 600 mobile networks, had been planning to sell its software download online beginning this weekend. The fix is supposed to be as simple as plugging an iPhone into your USB port, downloading a software patch and clicking an "unlock" icon.

But Uniquephones's John McLaughlin says that he received a phone call at 3 a.m. Saturday from AT&T lawyers ordering that his company halt their plans. "They said if we did release this, that they would be within their rights to go after us," he says. "These are bullying tactics." He says Uniquephones will delay the release of the software download until he is positive they are on sound legal footing. AT&T declined to comment on Uniquephones or Hotz (who tells NEWSWEEK he had not been contacted by either Apple or AT&T as of Saturday).

Another outfit called iPhoneSimFree has also announced it will begin selling a software-based unlock to iPhone users this week. They did not respond to repeated interview requests from NEWSWEEK, but the popular technology blog Engaget confirmed that iPhoneSimFree's unlock works.

Is all this legal? Technically, yes. The Digital Millennium Copyright Act makes it a crime to circumvent digital encryption—primarily an anti-piracy measure—with certain exceptions. One of those exceptions is for unlocking a cell phone. "It's an exception that's never been tested" in the courts, says Timothy Wu, a former telecomm lawyer and professor at Columbia Law School. "The copyright office wanted to say, 'This is for protecting DVDs, not to protect the cell-phone industry.'"

Hotz, the whiz-kid behind the hardware hack, isn't concerned about his legal standing. He's not offering his services up for sale and the steps required to unlock an iPhone are sufficiently complicated. ("Who's going to use this?" he asks. "Very few people.") In fact, the only people who have called him so far are journalists, "a venture capitalist and a guy who works at Qualcomm offering me a summer internship," he says. But Hotz, who ships off to New York for his freshman year at the Rochester Institute of Technology this very afternoon, has other ideas. "I want to intern at Google next summer if I can. I've got a friend there and he's, like, 'Dude, they have a cafeteria 24/7. You can go in there and eat whatever you want. You can go to sleep, hack for a couple of hours and go eat some more'." Who said kids today don't dream big?