Tony Blinard of Keys2iPhone.com writes:
Not too long ago, iPhone enthusiasts rallied the White House with an online petition to legalize out-of-contract iPhone unlocking. The Obama administration cast its support that generated only a lukewarm response from the industry. Not surprising: the top three U.S. wireless carriers - Verizon, AT&T and Sprint - have relied on contracts to sell cell phones for over a decade. With Apple's introduction of iPhone - the most expensive smartphone in history - the carriers could then generate lucrative profit margins on each and every phone sold under contract. And to make sure the customers wouldn't 'jump ship', the carriers locked in all subsidized iPhones.
Things have changed since then and it seems no regulation will be necessary to address carriers' lock-in restrictions - competition is taking care of this for us.
AT&T's top execs have indicated that the company aims to make the unlocking process as easy as possible, which certainly seems to be the case. Another sign of the competition heating up is the recent activation by AT&T of access to its data network for iPhone 5 users on the pay-as-you-go plans. This is hardly a coincidence.
Prepaid is big among mobile customers - it provides more control over cell phone bills, the freedom to switch between networks and other perks like access to less expensive local mobile carriers. Tourists from Europe and other countries, where prepaid is pretty much the industry standard, will also appreciate AT&T's 4G LTE speeds while visiting in the U.S. Moreover, many U.S. customers developed the habit of switching from the Big Three to T-Mobile and other prepaid carriers, like Straight Talk. Web statistics on unlocking requests from iPhone users indicate that many are searching how to, for example, switch from Verizon to AT&T, which is possible with Verizon's iPhone 5 that currently sells with an unlocked GSM port. AT&T's prepaid plan that supports data will now attract those who might have otherwise ended up going with T-Mobile.
T-Mobile has been moving more aggressively to upgrade its network which made it possible to boost data speeds to the levels comparable with those of its bigger rivals. The company now sells a full spectrum of latest smartphone models, including Apple iPhone 5 that can be put on a prepaid plan and purchased with just $150 down - no contract.
Clearly, the smartphone market's landscape is being shaped by forces that no longer resemble a monopoly. As Salvatore Mattera aptly put it in his article: while in the past Apple iPhone was the only viable option for the user "who wanted a fast, powerful phone that could browse the web and utilize apps", today, we see a rapid convergence among smartphone manufacturers - from Samsung's Galaxy to Nokia's Lumia. And consumers have a wider choice of carriers to power their new phones.
Thus, the economic reality dictates a new approach that has to be adopted by AT&T and other U.S. wireless carriers if they wish to stay on top of the game. This approach can no longer rely on rigid customer lock-in schemes of the past when the consumer did not have much room for maneuver both in terms of smartphone models and potential service providers: Apple's distribution network was limited to the Big Three and iPhone dominated the market. Today, the carriers realize that the risks of alienating the consumer and losing her forever are for real.
Research shows that price/promotion and data service are among the top most important factors in choosing a wireless carrier. Therefore, future competitive decisions will most likely focus on investing in infrastructure and improving overall service quality. In addition, the companies that can do a better job at communicating all the nuances of their various service plans are the ones that will have more appeal to the modern mobile user.
We are already seeing some signs of an ensuing race for faster data speeds and lower prices. According to the recent test study that compared major LTE networks throughout the U.S., AT&T holds an advantage in speed, while Verizon - in coverage. But T-Mobile is catching up quickly deploying their new LTE 4G technology city after city. Then, there are smaller carriers that are trying to chip off of the Big Three by competing solely on the price. Cricket Wireless, for example, has unveiled "Half is More" - an aggressive advertising campaign scheduled to air this June that will portray AT&T and Verizon as too expensive and deliver the message that cheaper just as good alternatives are available.