Unauthorized Cricket dealers unlocking Verizon iPhones

Unauthorized Cricket dealers may be unlocking Verizon Wireless' (NYSE:VZ) version of Apple's (NASDAQ:AAPL) iPhone 4 so that the device will work on Leap Wireless' (NASDAQ:LEAP) CDMA Cricket service, a company spokesman said. 

The blog Engadget posted a video of someone unlocking a Verizon iPhone so that it will work on Cricket, which offers flat-rate, prepaid wireless service. Cricket spokesman Greg Lund told FierceWireless that the company is aware of the issue and the practice is not something that it authorizes. 

"We're not condoning it," Lund said. "We're looking into this situation, but at this time I don't have any answer on what a resolution might be." 

A Verizon spokeswoman did not immediately respond to a request for comment. However, Verizon's terms and conditions state that the "iPhone 4 is configured to work only with the wireless services of Verizon Wireless, and may not work on another carrier's network," even after  customer completes their minimum contract term. Verizon also states in terms that it can suspend or cancel a customer's service if they modify a device from its original specifications. Verizon began selling the iPhone 4 last month.

There have been numerous instances of AT&T Mobility (NYSE:T) subscribers unlocking their iPhones to work on T-Mobile USA's network. Carriers typically lock phones to their network in order to ensure the can recoup the subsidies they dole out on handsets. Unlocking is a relatively straightforward process in the GSM space, but also is possible with CDMA phones. Indeed, MetroPCS (NASDAQ:PCS) has offered a program, "MetroFlash," since 2008 that allows customers to "reflash," or unlock their existing CDMA handset so it will work on the carrier's network. The Verizon iPhone is not listed among the devices that MetroPCS can reflash.

iPhones can also be "jailbroken" from Apple's App Store ecosystem. Jailbroken iPhones can run applications that are not authorized through Apple's App Store approval process.

For more:
- see this Engadget post

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U.S. regulators declare iPhone jailbreaking legal
MetroPCS will flash existing CDMA handsets
Apple warns iPhone jailbreaking can crash apps
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