Apple selling unlocked iPhones in Canada

Apple is trying to go where Google failed by selling unlocked phones directly to customers in Canada through its website.

Customers can purchase the eight-gigabyte iPhone 3GS for its full cost of $549, or the upcoming iPhone 4, which does not yet have a price listed on Apple's website. The customer is then free to go shopping for the best monthly service deal they can find, the company said.

"When you purchase your iPhone from the Apple Online Store, you'll get it commitment-free. So you can sign up for service with the carrier of your choice and change your carrier at any time," the website said.

In Canada, this means iPhone owners have considerable choice since Bell, Rogers and Telus all have networks that can accommodate Apple's devices. Bell's and Rogers' respective subsidiary brands, Virgin and Fido, also offer iPhone service plans.

All three carriers sell the iPhone in their own stores, typically at a discount in exchange for a multi-year service plan commitment. The carriers also lock their iPhones so that they won't work on competitors' networks.

Apple's move, however, will force the carriers to compete for the business of customers with unlocked iPhones, possibly even on a monthly basis. Customers will only need to buy a Subscriber Identity Module (SIM) or micro-SIM, which typically sell for about $10, to switch to a different carrier.

Similarly, unlocked iPhones will also work internationally on any GSM network, Apple said. Owners can therefore purchase a SIM or micro-SIM from a local carrier and avoid hefty international roaming charges from Bell, Rogers and Telus.

Apple's effort mirrors a move by Google earlier this year to cut wireless carriers out of the equation. The internet company began selling its unlocked Nexus One phone directly to customers online in the United States, then expanded the offer to Canadians in March.

In May, however, Google announced that it will eventually cease direct sales and instead adopt the traditional model of selling through carriers, complete with contracts and subsidies. Analysts said the change in direction was because of poor sales, a result of Google's lack of familiarity with selling retail products. Apple, however, has a well-established online sales channel.

The issue of technological locks is bubbling in Canada with the government's recent, controversial proposal to update copyright laws. While Bill C-32, unveiled earlier in June, would outlaw the breaking of digital locks on hardware or media, it does provide an express exception on mobile phones, an act that is currently legal.

A number of countries have laws stipulating that carriers must unlock phones, usually after a certain period of time or sometimes right from the point of sale. Consumer advocates have said similar laws are needed here, but carriers have said locks are needed in order to ensure that devices work properly on their networks.