Hackers start to take down the iPhone


According to an article in The Wall Street Journal [subscription required], hackers have figured out how to bypass a number of restrictions put on the iPhone by Apple (NASDAQ: AAPL) and AT&T (NYSE: T). Perhaps the most compelling work centers on activating key features of the phone without an AT&T service contract.

Current by-passes of restriction have focused on getting the WiFi features to work without AT&T activation. But, the next target would be to get the phone to work on cellular networks other than AT&T's. Another significant hack in the works is one that would allow the phone to work as a wireless VoIP phone that could make unlimited calls while connected to a WiFi network.

While the workarounds may not catch on in the US, they could threaten Apple's deals to get providers in Europe and Asia to pay huge sums for exclusive rights to the phones. If the handset can be adapted to run on any cellular network, the value of these agreements will be significantly undermined.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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