Apple to sell iPhone 4 unlocked in Canada

When the iPhone 4 goes on sale in Canada on Friday, it will bring with it something relatively new for Canadian wireless customers — the ability to pit the big three service providers against each other.

Apple on Monday said it will sell its wildly popular device to customers online and through its own retail stores, as well as through Bell, Rogers and Telus.

The difference with buying the phone directly from Apple is that it will be unlocked and contract-free, so customers will be able to shop around for a service plan with the big three.

The iPhone 4 is compatible with all three companies' networks, so customers would only have to pop in a Subscriber Identity Module (SIM) card, which carriers generally sell for between $5 and $10, to make it work.

Customers will also be able to switch providers whenever they like and use the phone in other countries with SIM cards from local carriers, which will allow them to avoid roaming charges from Canadian providers.

Industry analysts say Apple's move puts a higher value on the iPhone 4 in Canada than in the United States, where customers currently have only one carrier, AT&T, as an option for the device.

Not only does AT&T have an exclusive deal with Apple to sell the iPhone, but its network technology is also incompatible with most of the other big U.S. service providers.

"The offers or plans of the big three Canadian carriers might look similar, but for some customers who know how to bargain on a specific service or within a bundled backdrop, there may be some opportunities for cost savings," said Amit Kaminer, an analyst with The SeaBoard Group telecommunications consultancy. 

"And, having no contract? Some might say that you can't put a value on freedom."

High price

The catch, though, is the phone's price. The 16-gigabyte unit will sell for $659 while the 32-GB version will cost $779.

While the unlocked iPhone has the potential to be a game changer in Canada — where phones are generally sold at a reduced cost in exchange for the customer signing on to a long-term service contract — it's still too expensive to make a difference, said telecommunications consultant Johanne Lemay of Lemay-Yates Associates.

"There's room for prices to come down and eventually we might have a fairly large proportion of the market that buys phones up front," she said. "Some people will want it and there will be a market for it, but on the other hand it's still a very high price."

While Canadians are starting to show some appetite for paying the full cost of lower-priced phones up front, they are still likely to chafe at the hefty price tags that upper-end devices such as the iPhone carry, Lemay said.

Apple said it is also currently selling the iPhone 3GS, an older model with eight gigabytes of storage, unlocked in its stores for $549.

Rogers and Telus currently sell the 3GS for a similar price without a contract, but the device is locked to their respective networks. Customers can get the iPhone unlocked through a third party, but doing so incurs an extra charge.

Kaminer agrees that the iPhone's price tag is too high to change the wireless game in Canada. Most consumers prefer the $199 price point that generally comes with a multi-year contract, and $500 to $600 is "an uncomfortable price point for a phone for many," he said.

Antenna problem

Apple's move, though, picks up on an attempt earlier this year by Google to sell its high-profile Nexus One smartphone directly to customers, first in the United States and then in Canada.

Google sold the device — which was unlocked, contract-free and worked on the big three's networks — through a website, but the company lacked a retail presence. Google recently abandoned the effort on poor sales.

Apple will also have to contend with the iPhone 4's well-publicized antenna problem when it goes on sale in Canada, as well as 16 other countries, on Friday.

After its U.S. launch earlier this summer, a number of influential technology media including the non-profit Consumer Reports magazine found the iPhone 4 loses its reception when held in a certain way.

Apple chief executive Steve Jobs recently refuted the criticisms as "overblown," but offered all buyers a free rubber case for the device, which mitigates the antenna issue. 

Canada's new cellphone companies — Wind Mobile, Mobilicity and Public Mobile — have been selling contract-free phones for the past seven months, although those devices are still locked and not compatible with the Bell, Telus and Rogers networks because they use different wireless frequencies.

NDP MP Bruce Hyer recently introduce a private member's bill, C-560, in the House of Commons that seeks to create a law that would force cellphone carriers to unlock phones.

Many countries have rules that require carriers to unlock devices, either when they are purchased or after a certain period of time. In Canada, it is legal to unlock a phone but carriers are not required to do so.