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Wireless Carrier Lock-In, iPhone 5 Edition

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Last December I wrote an article when the iPhone 4S was introduced about how U.S. wireless carriers fudge the concepts of “locked” and “unlocked” with their customers, in terms of roaming and portability of iPhones. Almost a year and an iPhone upgrade later, this is sadly still the case.

Apple, same as makers of Android phones, has to play ball with the cellular carriers to prohibit smartphone owners in the U.S. from buying a phone through one carrier and using it on or porting it to any of the other three major carriers with full connectivity. I understand the legitimate right of a carrier to restrict a customer from taking a subsidized phone and moving their service until the phone has been fully paid for. But in the case where a customer pays the full retail price or pays off the contract term, he should be able to do whatever he wants and select any carrier he chooses. Of course, it's not in the carrier’s best interest to allow them to do so, and thus everyone is “stuck” with a phone they cannot use if they decide to switch carriers. The carriers will continue this way until there is legislation or FCC rule-making to stop it.

Now that the iPhone 5 has been introduced I took another look to see if anything has changed. It hasn't to any great degree. I spoke with Apple customer service to work my way through the issues of locking, roaming, portability and interoperability of the new phone. Then last weekend I spent two days interviewing retail salespeople for the four major carriers in stores in Minneapolis. Retail salespeople are often the best resource for real-world information since they are on the ground dealing with customers.

To be fair, Android phones are subject to the same limitations, but they do not have the same kind of fervent demand for their products as Apple does, even though the Android operating system runs just over half of all smartphones in the U.S., according to ComScore. Apple released its iPhone 5 on September 21 and sold millions of handsets the first few days. It still has not covered its back orders. I was just in Tokyo and Hong Kong and the new iPhones are selling at twice the retail price, and every phone is gone the moment it arrives.

There are currently three versions of the new iPhone in the U.S.: one for Verizon, AT&T, and Sprint. All are carrier-locked, which means they are technically restricted for use on those cell providers only. A fourth model, the generic Apple GSM version, will be released in the next few months, according to senior staff at Apple. They do not know when this unlockable phone will come out, but you can be sure the release has been timed (read: delayed) to make sure that everyone has a chance to buy a locked model first in order to protect the carriers.

I bought a Verizon iPhone 5 from the Apple store at the Mall of America on October 27, to upgrade my 4S and to run tests between the carriers to verify which phones will actually work on which networks. A consumer who asks the different cellular companies or Apple about interoperability will often get conflicting answers. The only way to know for sure is to try them out with individual SIM cards.

While AT&T and T-Mobile may allow Verizon phones to be used on their system, it is with limited functionality which does not include access to higher-speed LTE networks. (Each carrier uses slightly different spectrum for their LTE.) For AT&T and T-Mobile, this is not so important for the next year because of the limited build-out of their LTE networks. AT&T only has 80 LTE markets up and running, and T-Mobile, with its new partner MetroPCS, will take some time to achieve real 4G coverage. The real problem is that two of the three carriers (Verizon and Sprint) run CDMA networks that don't recognize the electronic serial number from other carriers’ phones that run on GSM and other types of CDMA networks.

Sorting Out The Technical Issues

The iPhone 5 is a real 4G phone with LTE capabilities, unlike the 4S that runs on the slower 3G networks. A close examination of the specifications between the two phones reveals that they essentially both operate on the same frequency bands, other than for the new enhanced networks. As I noted in my previous articles both on the iPhone 4S and the iPad, there is a fundamental problem with the difference in frequencies that the carriers use for LTE services. This is true throughout the world, as shown in this chart. Depending on where you use your phone (or tablet), you may or may not have service.

In the U.S. and Canada there are two different systems; one for Verizon and Sprint, and one for AT&T. Apple has different model numbers for each carrier: the A1428 is the AT&T GSM locked version; the A1429 is the Verizon and Sprint locked CDMA-LTE models, the A1429 GSM model is the generic Apple GSM version, with no CDMA radio. This means it will never work on Verizon or Sprint but will work on all other GSM carriers worldwide.

Apple has decided that their U.S. locked handsets are not interoperable, and my question is: How come? Apple clearly has the capability of producing a handset with the Qualcomm Gobi chip that can hop in agile fashion across systems and frequencies, allowing owners to roam on any U.S. and Canadian network, anywhere. Instead Apple uses the Qualcomm MDM9615 baseband chipset in the iPhone 5, which handles all the channels and protocols except for China, which has chosen to develop its own standard to avoid paying patent royalties. Maybe a later version will use Qualcomm's fifth-generation chip, the MM9215, that will allow roaming on virtually all systems in one device.

But for now Apple has chosen to segment the market and force consumers to purchase a unique handset for each carrier. Apple would say its aim is to make the best product it can without compromising on design and functionality. In my view, it is simply about money: the cost to produce a handset, and the revenue they can derive by protecting each carrier’s interest in locking in and retaining customers.

The FCC is considering a Proposed Rule Making petition that would force roaming at the 4G LTE level so customers can use their handsets on any carrier, but the FCC has not acted yet. The hardware manufacturers clearly have the capability to implement this requirement when it is finally enacted, but that will take some time. The LTE systems are not compatible because of the failure of Apple (and the Android manufacturers as well) to provision their radios appropriately.

The second issue is the incorporation of a CDMA radio in all of the handsets. Verizon and Sprint are CDMA-based systems. This is a different technology than employed by AT&T and T-Mobile, and the two systems are not compatible. The Verizon and Sprint phones will theoretically work on each other’s systems because they incorporate CDMA and GSM radios, but the converse is not true. An AT&T phone will never work on Verizon or Sprint. This is for two reasons: it does not have the capability to talk on CDMA (because it does not contain a CDMA radio) and its LTE capabilities are not compatible.

One more side issue to throw in the mix: a GSM-based iPhone (AT&T) has the capability of supporting voice and data simultaneously, whereas this is not possible on CDMA systems. So if you must have this ability to surf the web and talk at the same time, AT&T (and maybe T-Mobile) is your only choice. LTE technology may evolve in the future to allow this option, but it does not exist presently.

Alright, So Which iPhone 5 Can Work With Which Networks?

Of the three presently available iPhone 5 versions, only the Verizon is truly “unlocked” for use on other carriers both in the U.S., Canada, and overseas, sort of. Because it has both CDMA and GSM radios, it will technically function on any CDMA or GSM system, but the reality is that you are pretty much stuck with the carrier for which the phone was designed, at least in the United States and Canada.  But there is a caveat. You can use your Verizon iPhone 5 on AT&T and T-Mobile at 3G and near-4G (not LTE) speeds. In order to confirm this, I obtained SIM cards from AT&T and T-Mobile and tested them in the Verizon iPhone 5.

AT&T was my first stop. When I took my new Verizon iPhone to register on their system, I was first told I could not do it. But with prodding, the manager of the store said that they could “massage” the system and force the registration with a phantom International Mobile Equipment Identity (IMEI) number. The IMEI identifies the particular handset. It is not required for user authentication and in fact the AT&T agent actually inserted a Blackberry IMEI into the system to fool it so I could obtain data services.

I could not use the AT&T LTE network which meant I was limited to 3G but it worked on the network and actually displayed a 4G icon. (Don't be fooled by the logo: The small print in AT&T disclaimers admit its 4G service is actually “4G-like” which delivers what it claims is “equivalent” to 4G speeds.) So if you purchase a phone on Verizon and you decide to switch to AT&T, you can have limited service but not real 4G. Conversely, if AT&T sold you one of their carrier-locked iPhones, it is restricted for use on AT&T both in the U.S. and on foreign carriers, even with a local SIM card outside the United States. The salesman told me that AT&T “might” unlock the phone sometime in the future, but that was not for certain al all.

Next stop, Sprint, which just got a needed $20.1 billion bailout from the carrier Softbank in Japan. I was told by three different managers at two corporate stores that Sprint would not register any phone from another carrier and they would not unlock their phones for use on another carrier. End of story.

T-Mobile was the last carrier I visited. I had an account with them for use in Europe and on cruise ships with a Blackberry because they are the only provider that has an unlimited email package for $20/month. I obtained a nano-SIM card for my new iPhone, re-programmed the APN settings for data service, and the phone worked without a problem. T-Mobile is in the process of re-configuring their system to work with iPhones, and as a result of their merger with MetroPCS, they are expected to begin offering their version of the Apple phone at some point in the future. I have been using my Verizon iPhone on T-Mobile for the past week on both EDGE and 3G systems without a problem.

What About Registering An AT&T or Sprint Phone On Verizon?

I spoke with Verizon customer service about the use of a Sprint or AT&T phone on their system. Forget it! Like Sprint, they will not recognize any ESN other than those in their database for phones manufactured for use on the Verizon network. I have no qualms with this for AT&T customers because of the basic incompatibility between the GSM and CDMA networks as well as the different LTE frequencies. Sprint should be a different story, and Verizon should allow Sprint phones to operate on their system, but of course, Sprint precludes that option by locking their phones.

Your best bet is to purchase a Verizon phone with full radio capabilities. I would imagine that Apple will update their iPhone 5 firmware to accommodate system interoperability when it becomes mandated, but of course, that would give them another reason to introduce the iPhone 6 or 7.  As long as customers will stand in line to buy anything new that Apple introduces, you can be sure there will be new phones, justified upon the basis of changes in regulatory requirements and technology. All one needs to consider is the introduction of the fourth generation iPad this past week. There is no significant difference between the new model and my iPad 3 (sorry, new-old iPad) except the connector and processor.

(One of the side issues I encountered instantly with Verizon was the cancellation of my grandfathered international roaming data plan when I registered the new phone. The salesman did not bother to explain, before the migration, that any 4G LTE phone would cancel my 3G data plan and replace it with the more expensive deal. Had I known that, I would not have made the change on the account but rather switched the phone to another phone number.)

I guess it would be unthinkable for a manufacturer to make a frequency and system-agile phone that we could use for at least one or two years without being forced to decide on one or two upgrades in between. The real question: when did Apple design the iPhone 5? I suspect it was long before the 4S was introduced. If the iPhone 5 had true interoperability, a lot more people would have held off on buying the 4S. But then, it’s all about revenues and what we will buy, isn’t it?