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In a bid to curb the market for unlocked iPhones, which are typically purchased in quantity from Apple or AT&T stores in the US and then unlocked and resold at higher prices oversees, AT&T has said it will require iPhone 3G buyers to activate the handsets at the point of sale.
"The way that these phones are going to be sold is that they are going to be activated in the stores," Ralph de la Vega, president and CEO of AT&T Mobility, said during a conference call with analysts last week. "So, we're going to need to have all the criteria that someone would need to have in order to get a phone and qualify for a 2-year contract."
Apple's first-generation iPhone released last June was sold without those requirements upfront. Instead, customers were able to purchase the device off the shelf as they would an iPod or piece of software, then take it home and activate an account with AT&T through Apple's iTunes software.
de la Vega said the new "fraud prevention" measures "will significantly mitigate" the risk to AT&T that grey marketers would be able to purchase the greatly subsidized handsets from the carrier and then turn around and unlock them from the AT&T network, resulting in an estimated $200 immediate loss that AT&T would be unable to recoup.
For the same reasons, there's been no announcement regarding online sales of the iPhone 3G in the US through either AT&T or Apple. At the same time, however, a couple of official statements suggest that it will be possible to complete activation of the handset at home, which would be welcomed news for those would-be early adopters who've begun to fear long lines and hefty waits at the companies' retail stores on July 11th, the first day the device is set to go on sale.
Specifically, Apple in its UK press release hinted that activation outside of retail stores will be possible, stating that in addition to O2 and Carphone Warehouse retail stores, "iPhone 3G will also be sold online through O2 and Carphone Warehouse." When responding to questions on what other measures AT&T was taking to prevent unlocking, de la Vega in the aforementioned conference call similarly indicated that not all iPhone 3G units would be fully activated during the point of sale.
"Without getting into details of the contract [with Apple], there are penalties if the phones don't get activated in the first 30 days, or if they are returned in the first 30 days, that we're working with Apple on," he said.
Providing possibly the best window into how the activation process will work was an internal AT&T Mobility memo issued last week and obtained by AppleInsider. It suggests that customers may be able to leave a retail store without a fully activated iPhone 3G, but only after having signed their intent to adopt a new 2-year service agreement and iPhone data plan with proper identification. This information would immediately make its way into AT&T's systems along with the IMEI number of the new iPhone 3G, allowing the customer to complete activation at home via iTunes if they so chose.
"The new 3G device will be activated in store in both AT&T and Apple stores. Customers must accept AT&T and Apple Ts & Cs, sign a 2-year agreement, and select the data plan for the iPhone 3G before leaving the store," the memo says. "The current iTunes activation process will no longer be required for iPhone 3Gs, however a short tether process to unbrick the 3G device will be performed in all AT&T stores (tether cords will be provided). Apple stores will also perform this tether process, however in the event that a customer's device is not tethered in the Apple store, their device will be inoperable until they get home and tether through iTunes. Prepaid and Pick Your Plan will not be allowed on the 3G device."
The memo added that AT&T's "SSK has been modified to allow customers interested in the iPhone 3G to enter their information, select rate plans and data plans, and print a document that will allow COR reps to quickly access the customer's information in OPUS and save time for data entry in the activation process."
In other words, customers may be able to agree to terms and select a new rate plan at home before July 11th, and then print and bring with them on July 11th a document that AT&T and Apple reps can quickly scan and verify before handing over a new iPhone. This would speed up the first-day sales process and function similar to the $100 iPhone credit coupon offered following last year's iPhone launch.
Both Apple and AT&T are expected to provide the public with a clear set of policies and procedures for iPhone 3G activations closer to July 11th.