Smartphone resellers stymied by AT&T's alleged policy changes

Smartphone resellers stymied by AT&T's alleged policy changes

By Bobby Elliott, E-Scrap News

Nov. 22, 2013

The soaring global market for used smartphones has apparently hit a snag, and various reports have suggested carrier AT&T is behind the impediment.

According to a recent Wall Street Journal (WSJ) article, smartphone resellers — largely dependent on "unlocking" used smartphones to resell them — began reporting problems with unlocking bulk quantities of used AT&T iPhones in October. While no one knows exactly what's changed, everyone appears to be accusing the carrier of complicating the process and even forcing small electronics buy-back companies to close.

Typically, when customers have fulfilled their contractual obligations with a U.S. carrier they can "unlock" the smartphones through the carrier or a third party unlocker. This action allows a user to re-activate service through any number of networks in the U.S. or abroad. Due to the high value of used smartphones on the global market, the buy-back industry has exploded. Companies compensate customers for old devices and unlock them through the original carrier, the company's internal team or a third party. The devices are then resold.

Louis Ashner, owner of Baton Rouge, Louisiana-based Side Street Technology, told WSJ his company was "on track for $1 million in revenue this year." Most of the money Ashner made was from reselling AT&T iPhones, which, until October, had been relatively easy to unlock. However, Ashner told WSJ due to unlocking snags, "the market is gone," forcing the once-profitable Side Street Technology to close.

Gazelle's CEO Israel Ganot told E-Scrap News that the Boston-based electronics trade-in company has lowered the price they are willing to pay for used AT&T iPhones as a result of the recent changes. "The value of AT&T iPhones has come down drastically relative to other brands. In fact, AT&T phones are now worth less than Verizon; Gazelle dropped what they pay for AT&T iPhones by 23% (compared to 17% for Verizon)," Ganot stated.

According to various insiders, unlocking AT&T iPhones, a task that once cost third parties one or two dollars, now costs $100, with no guarantee it will work.

For its part, AT&T declined to comment on any policy changes with regard to mass unlockings of used iPhones, but company representatives told WSJ the carrier had not changed its policy for individuals wishing to unlock their phones once they have fulfilled the terms of their contracts.

AT&T currently accounts for 48 percent of operating iPhones in the U.S.

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