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iPhone will be locked to partner networks

Apple has dashed the hopes of consumers everywhere planning to pick up an iPhone without signing up for an AT&T subscription.

A revelation by Charles Dunstone, chief executive of UK retailer the Carphone Warehouse, shows that Apple’s reach extends far beyond the handset and deep into the network itself.

During Carphone’s results announcement Wednesday, Dunstone was quizzed on the iPhone and said that any European launch would likely follow a similar structure to the exclusivity deal the company struck with AT&T in the US.

“[The launch] would have to be in some form of deal with a network. The way the iPhone works is it requires operators to install a whole load of servers and stuff deep in the network to supply services,” he said.

This suggests that if Apple is to be involved in delivering services through the network, the company has secured itself a share of those revenues. The system probably works in much the same way that Research In Motion (RIM) secures itself a cut of operator revenues by requiring that all email is sent via a box on the BlackBerry network.

The move will also put the kibosh on a prospectively huge grey market by preventing users from unlocking the phone to be used on a different network.

“So you can’t get the phone from AT&T and then put a T-Mobile SIM in it,” Dunstone said, “it won’t work properly because it can’t access all this proprietary stuff.”

Leaked screen shots that purport to be of AT&T’s internal accounts system appeared on the internet last month, apparently showing that the iPhone would also be released on a prepaid plan.

The rumour drove speculation that US consumers would be buying the prepaid devices up and then reselling them at a premium on the global grey market to eager adopters outside of the US.

AT&T has struck a “multi-year” exclusivity deal with Apple, under which only it will be able to sell the device. While details on the exclusivity deal are scant, AT&T has previously said that a two year service contract would be required.

The iPhone will not make an appearance in Europe until year end and Asia until 2008. Outside of the US, no operator deals are yet known to have been struck. Indeed, Apple’s requirement to put boxes on the network may well be a point of contention in the negotiations.

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