The Real Reason Verizon Sells The iPhone 5 Factory Unlocked

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The iPhone continues to do well on Verizon.
The iPhone continues to do well on Verizon.

It was recently revealed that Verizon sells the iPhone 5 factory unlocked out of the box. Not only can you use the Verizon iPhone 5 on another CDMA carrier, but the device will also work on non-LTE GSM networks, like AT&T. U.S. carriers will typically unlock off-contract iPhones for free, but Verizon is selling the iPhone 5 unlocked with a two-year contract as well.

Buying an iPhone 5 at the full, unsubsidized price on AT&T doesn’t guarantee that it will be unlocked, but AT&T will typically grant unlock requests for customers in good standing. The same goes for AT&T iPhone owners who have fulfilled the life of their two-year contract.

There’s been multiple theories suggested to explain why Verizon is behaving this way, but the real reason is much simpler than you would think.

First off, don’t think for a second that Verizon is selling the iPhone 5 unlocked for no additional charge because it wants to be nice. Some thought the reason was because Verizon actually had to sell unlocked thanks to the FCC. The coveted 700MHz block of LTE spectrum Verizon uses has some stipulations, namely that locked handsets cannot be sold by Verizon for use on its LTE network. As The Verge points out, the problem with that theory is that Verizon currently sells locked Android devices. It doesn’t look like Big Red really cares about potentially getting slapped on the wrist by the FCC.

So what’s in it for Verizon? Well, Verizon isn’t advertising the unlocked aspect of the iPhone 5, so there’s little commercial gain. It could be that Verizon just doesn’t care. My money is that it’s all about constructing a bigger narrative: good Verizon vs. bad AT&T. There are many savvy iPhone owners with grandfathered data on both carriers, and these customers are weighing the headlines to determine their next purchase. AT&T is blocking FaceTime over cellular, but Verizon doesn’t allow for simultaneous talk and surf. AT&T lets you keep unlimited data when you upgrade, but Verizon has better LTE coverage.

I think the carriers care way more about customer retention than they let on.

Image: Today’s iPhone