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When news first hit that Apple was making the iPhone a device to be exclusively used on AT&T’s shabby network, I was immediately agitated. Nonetheless, I figured that with a little geek ingenuity behind the problem, someone would hack the iPhone to work with non-AT&T networks, especially if T-Mobile was the chosen iPhone carrier for the European market. After all, the core hardware used in the iPhone is flexible enough to work on any GSM network, and Apple even included carrier logos in the iPhone’s software rollout. At the very least, this suggests that Apple decided on AT&T late into the game and forgot to remove the old logos. Or, perhaps Apple fully expected the current generation iPhone to be used on non-AT&T networks despite the five-year exclusivity agreement between the two companies.

As I anticipated, hackers are well underway with efforts to explore the iPhone, and its UNIX underpinnings are already being mapped out. While some reports are shadier than others, word is nonetheless getting around that unlocking the iPhone is a near possibility. The question raised by the masses, should an unlocking method be available soon, is whether or not Apple will try to patch the upcoming exploit by way of an over-the-air update, or more likely, an iTunes update.

Conspiracy-minded, I propose a third option: Apple will do nothing. The reason they will do nothing is because they have more to gain by not patching the exploit, since it will mean more iPhone sales and continued market penetration. Since the exploit is on Apple’s side, AT&T can merely stand by, and Apple can always check AT&T’s complaints by claiming the exploit is a firm software or hardware limitation, and the only way to fix the exploit is by recalling all the iPhones already in customer’s hands, and spending an inordinate amount of money re-engineering the iPhone’s core components. Even if AT&T doesn’t buy it, their hands would pretty much be tied.

Never mind that locking phones to one carrier is already illegal in some countries, to include the UK, where the iPhone is expected to be sold by early 2008 if not earlier. And, if it’s not illegal in most other European countries, it likely will be once more people complain. Even in the United States, the issue has picked up steam. Said Maxator recently:

The current FCC chairman has given speeches several times criticizing this practice and putting cell phone producers and carriers on unofficial notice… [The release of the iPhone] may be exactly what the FCC and Congress needed, a glaring example of greed expressed in exclusivity that hurts customers. Congress held hearings last week and support for ending handset exclusivity received support from both parties.

While AT&T can lobby with tooth and nail to maintain hardware exclusivity to one carrier, the issue will ultimately defy their favor. The key component in this equation is whether a legal decision in the United States will happen within the next year, or just beyond that. Either way, the only thing AT&T can positively bank on for the next five years is that they’re the only carrier allowed to sell the iPhone to customers directly, whereas non-AT&T customers will have to buy from Apple, which is hardly a big deal. Perhaps Apple, knowing how legal favor in the UK fell towards non-exclusivity, anticipated the same thing happening in the United States, and so shipped their products with all the software eye-candy (carrier logos) to be ready for a carrier-unlocked world. In other words, once locking phones is found to be illegal in the United States, Apple can unlock all the phones already out there with a simple software update.

In the meantime, it’s not worth Apple fighting the hackers out there. In fact, it’s in Apple’s interest to have made iPhone hacking easy enough for an exploit to be found a couple months after release, which is just easy enough to calm AT&T into a false sense of security during the initial iPhone rollout. Apple’s not liable if hackers unlock the iPhone; Apple itself isn’t breaking an agreement with AT&T if third parties unlock the iPhone.

So maybe visual voicemail won’t work immediately, or at least until other cellular networks figure out a way to make it work. Even if they have to wait for phone locking to be judged illegal, these networks will ultimately support the iPhone. And, in the meantime, Apple will continue to count their monies when iPhone unlocking becomes widespread, having gained the market advantage by getting all the hype out of AT&T’s free advertising, and limiting itself to one carrier only officially. It’s pretty much an ultimate conspiracy, but why put it past Steve Jobs? In the meantime, even some third-parties could make money by selling unlocked iPhones, while Apple continues to sell unmodified AT&T-approved devices.

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