Monday, 21 July 2008 23:29

Telstra customer claims free unlock for outright iPhone 3G purchase

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An iTWire reader by the username of “mac user” was outraged to discover that the iPhone 3G 16GB model he’d purchased outright did not come with a free unlock, but instead was to cost $150. So he did his homework and now claims that Telstra has unlocked his iPhone 3G free of charge! Has a massive can of worms just been opened for outright current or future iPhone 3G purchases from Telstra, Optus and Vodafone in Australia?

After I wrote an article entitled “One Telstra customer found a way to get a better Telstra iPhone 3G deal!”, it looks as though a second has managed an even more remarkable feat: getting Telstra to unlock his outright purchased iPhone 3G.

It could well mean that Telstra cannot charge an AUD $150 unlocking fee for outright purchased iPhones, and could even mean that Telstra needs to refund the fee to anyone that has paid it!

Writing in the comments section of that article, an iTWire reader by the username of “mac user” explained that he’d purchased an iPhone 3G from Telstra for AUD $847 – the 16GB model.

It’s probably best to quote our intrepid “mac user” for the most part from here on in as it’s his story and it’s quite intriguing.

He says that a week after the official launch of the iPhone, he decided to buy one outright. Realising they were out of stock at Optus stores, who only seem to want to sell them connected to a plan, he checked with a Telstra store, which then directed him to Telstra’s flagship T-Life store on Bourke St in Melbourne’s CBD.

So he went to Bourke street, “inquired and yes they had stock and yes they can be bought 'outright' and no they do not offer the iPhone on a pre-paid plan... I also let him [a T-Life staff member] know that I needed it outright as it had to be capable of going on my employers business plan. So I go ahead and process the order.”

“mac user” then tells us that: “Next minute the runner brings the sales guy the phone, which he proceeds to open, at which point I stop him and ask why is he opening it, he states that as I am purchasing the phone 'outright' he must 'activate' it with his 'blank' sim in his pocket, it is at this point that he states that it must be locked to Telstra network and I need to unlock it, he then states that it locks to the first sim put in the phone, so he can’t see a problem if the first sim put in is my employers Optus sim and then register with iTunes.

“This was all a bit confusing, and I ask if he has to put his 'blank' sim in the phone, and he states that it is illegal for him to let the phone leave the store without him 'activating' the phone first, so I didn't think too much more of it.

“Paid my $847.00 in return for a brand new 16gb iPhone, and a paper bag to put it in. No contract, no signing anything and no terms and conditions.

“I then get back to my office, and proceed to play with my new toy, and put in my Optus sim... Sim error (or similar) cannot connect to iTunes store.
“So I call Telstra and they put me through to the iPhone activation department, and say yes they will happily unlock the iphone.... FOR $ 150.00!!!!!!!!!!!!!

“WTF!!!!!?? I proceed to ask why and the only answer they can give is “that’s the price to unlock the iPhone” even though I purchased this 'outright' I am being charged to unlock MY PROPERTY!!

“Any Telstra phone you buy 'outright' means exactly that - OUTRIGHT, unless of course you buy a prepaid phone, where it clearly states that it is locked to the Telstra network, and unlocking charges are between $50 and $200 depending on phone.

“This is fair enough, as you get a subsidised phone, with a sim, and usually a couple of dollars of call credits, But all the other phones, if you buy them 'outright' then you buy the phone for the RRP, and walk away, no plans, no contracts, no SIM. Even the Telstra badged phones have an 'outright' price (as I bought one a few months ago for when working in non optus areas - however that did have a Telstra sim, but on a casual contract).

“So here I am with an iPhone I own outright, but cannot use unless I sign up, get a Telstra sim and start carrying 2 phones - one for work and one for the iPhone factor!

“This must be illegal, and Telstra are definitely in breach of the telecommunications industry code of conduct, on more than one point, and nowhere is this charge referred to in any of their general terms.”

At this point, “mac user” then quotes a dictionary definition of the word “outright” which includes, amongst other definitions, “without further payments due, restrictions, or qualifications”.

So, what happened next – and how does “mac user” claim to have received a completely free unlock from Telstra? Please read on to page 2.


After reading “mac user’s” story, I wrote a comment reply, stating that both Telstra and Optus had announced unlock charges, that buying Optus’ phone with the $80 unlock may well have been cheaper, that he might want to take it back for a refund, and that unlock fees for the iPhone were a horrible thing.

”mac user” thanked me for my reply, and then explained to me that:

“Main reason I'm annoyed is the fact that all other phones (apart from prepaid) do not have any restrictions or locks on them. The Optus $80 lock is fair enough as it is offered Prepaid with sim, call credits and data bundle.

“It is more than clear that all of the telco's prepaid options are locked to their particular network, however the Telstra iPhone cannot be purchased on a Prepaid plan, just 'outright'. There are no conditions or advertisements that explain the so called 'outright' charge.

“I am not going to return the iPhone - why should I? I’m happy with the product, and I own it 100% so why should I pay $150.00 to unlock my property? Apart from the fact that most people will because they want to play with their new toy.

I will take this further, and with the information I have sourced from documents from The Australian Communications and Media Authority industry code for customer information on pricing, various parts of the Telecommunications Act, the Australian Competition and Consumer Commission, the Office of Fair Trading and Telstra’s own terms and conditions, I would be very surprised if they can get away with this.

“My aim is to get MY iPhone unlocked for free. I think everyone who has paid the $150 unlocking fee, should have it have it refunded to them.

Personally I would prefer to be hooked up to Telstra, but I refuse to carry 2 phones for that preference, and ultimately when I pay to own a product outright, I should have the choice as to who I choose to provide me with service.”

Well, those are certainly fightin’ words, and I wished “mac user” the best of luck, fully agreed that an outright purchased iPhone should be just that, an “outright” purchased iPhone that is fully unlocked, and asked him to keep us all informed of his progress in getting his Telstra-source iPhone unlocked free of charge.

So it was with some surprise that two days later, “mac user” writes back in the comments section to declare “VICTORY!” in his quest to get his iPhone unlocked – free!

How he did it is amazing – and could really open up a can of worms for Telstra and any other telco that sells an iPhone on an “outright” basis. It could even see the Australian telcos refuse to sell iPhones outright in the future, or change their terms and conditions to avoid having to unlock “mac user’s” iPhone free of charge, as he describes on the next page.

It could also set off a flurry of refund claims for anyone that has already paid the $150 unlock fee!

Please read on to page 3 to see precisely what "mac user" did next!


Well, as I was saying, it was with some surprise that I received, in the comments section, a post from “mac user” claiming “VICTORY! Over Telstra's unfair $150.00 Network Unlocking charge”.

Once again, it’s just going to be easier to quote “mac user” directly, as it is his story. He explains: “Some very good news out there to anyone who has felt ripped-off by Telstra's unethical 'network unlocking' charge.

“After extensive research over the weekend and reading pages of The Fair Trading Act 1999, the Australian Communications Industry's Explanatory Statement for the ACIF C521:2004 Customer Information on Prices, Terms and Conditions Industry Code, the Trade Practices Act 1974 (and its many revisions) including plenty of helpful information from the various websites including the ACCC, the Office of Fair Trading (VIC), the Telecommunications Industry Ombudsman, Comlaw, and the ACMA (which proved to be the most helpful) I found more than a few Breaches to help my case against Telstra and their unfair Unlocking Charge. Here’s how it transpired...

“I decided to go straight to Telstra before contacting the Ombudsman, Fair Trading or the ACCC, as I know they would first expect myself to make all efforts to resolve my complaint directly with the provider.

“My first call was to the 'Pre-paid' unlocking team as these guys are the only ones able to unlock and reprogram handsets locked to the network. Without disclosing what type of phone I had, asked a few questions regarding 'unlocking' non-prepaid handsets, and was given the story that only Prepaid phones should be locked, and if there was a contracted phone 'locked' to the network, "unlocking it shouldn't be more than $50 bucks".

“So I then requested an IMEI unlock, and then as expected, was then told that there was a Department dealing with the iPhone unlocking, and was unable to provide any further information regarding the costs or details of the 'unlocking' fee.

“After a short wait, I was then transferred to the 'iPhone Unlocking Team' who have all obviously all been trained with the same slapped-together Training manual, as they all spat out the same monotonousresponse "the only way to unlock the iPhone is to pay the $150 iPhone unlocking fee by credit card", and when asked what the charge was for resulted in the same initial response with an occasional uninformed addition of either "that’s what Apple charges to unlock the phone" or 'that’s the standard charge for network unlocking".

“On this occasion After refusing to Pay the charge I copped all of the above, and then at least 2 more "the only way to unlock the iPhone is to pay the $150 iPhone unlocking fee by credit card" responses, I asked to speak to the team leader, to which I was refused the opportunity, so I then asked to speak to the complaints Department - to which I was then told, there is No Complaints Department!

“It was at this point that I introduced a part of the Telecommunications Consumer Protections Code that states that the customer must have reliable, accessible processes through which they can make a complaint. I was then placed on-hold.

“After about 5 minutes I was told that an email had been sent to the team leader, who would review it, and then pass it onto the Complaints Department! I could not help but to throw in the comment "So there is a complaints Department?" to which I received, yes but I cannot transfer you because they are in the "email world".”

“mac user’s” amazing story continues on page 4 – please read on!


”mac user’s” story on unlocking an “outright purchased” iPhone 3G from Telstra free of charge continues: “By this time I had had enough, and requested a record of the phone call, the Team Leader and the Operators Name and staff numbers, of which I received the Team Leaders, and operators First Names only - apparently the iPhone unlocking Department are not allowed to disclose surnames (understandably) or surprisingly the Staff Numbers?

“But I was assured that Telstra Would know who I was referring to should I give this information to them at a later date.

“I now decided to go straight to the Complaints Review department (High level complaints) and used the number which is generally only given by the TIO.

“Being greeted by a pleasant Team member, I was asked for my TIO reference number, and mentioned that I did not have one, but could hang-up and call the TIO for a number, after explaining my situation and nature of complaint, I was told that I would be transferred to someone in the unlocking Department, and to ask to speak to the Team Manager.

“Now I was back in the system of the iPhone locking department, and greeted by who I can only assume to be a team leader (not the name I was given earlier) I requested to speak with the Manager, but my operator was insistent that he could help me.

“I repeated my request to have my iPhone unlocked, and was given the same "the only way to unlock the iPhone is to pay the $150 iPhone unlocking fee by credit card" response, to which I stated a couple of reasons that this was in breach of codes, terms and acts I had researched, to which more uninformed 'guesses' as to why the fee was justifiable.

“After again asserting my reasons, and that the Complaints Review department transferred me to this department and instructed me to request the manager, I was eventually put on-hold and finally I was greeted by a Full Name, and a "how can help".

“After again going through the verbal tennis match of the Training manual response and my reasons, I again explained that I hoped to resolve this matter before resorting to requesting the assistance of The ACCC, The Office of Fair Trading and Consumer Affairs.

“I explained that Telstra Were in fact in breach of the Telecommunications Industry Code and the Fair Trading Act 1999, I was quizzed with "which act or code are we in breach of?", to which I quickly shuffled through my pages and found a section that was not my best ace up my sleeve but it was the one of the codes that I believed they breached; ACIF C521:2004 Customer Information on Prices, Section 6 that concerns the provision of information by a Supplier to its Customers about the Supplier’s Telecommunications Products.

“After some debate about why and my reasons as to why, mainly the complete lack of pricing information, and Telstra’s inability to provide me with the requested information, or as to where it could be found in their Terms and Conditions, or on their website, I was placed on hold again.

“After a relatively short 5 minutes, I was responded to with the answer I has been seeking; Telstra would Unlock my iPhone without Charge!”

But the story does NOT end here... please read on to page 5!


”mac user’s” fascinating story continues: “I was again misinformed that should I place another SIM into my iPhone other than the providers that I intended to change to, the phone would be locked again, and I would need to pay that provider an unlocking fee to place any other providers SIMs into it.

”This I know is Not the case, confirmed by Apple, that "once you iPhone is unlocked-It is Unlocked". It just requires a 'Back-up and Restore' to 'Lock' on to the new providers Sim.

“Needless to say, after only 2 hours on the phone, and less than 5 Hours and a 'back-up and restore' the new network settings were available to update.

“I have since been enjoying The great features of my Optus Networked, Telstra supplied, Fully unlocked Fee-Free iPhone. :)

“Proof that that Telstra's $150.00 Network Unlocking fee for an 'outright' paid for (not pre-paid) iPhone IS unfair, and cannot be requested.

“Should you have paid this unfair Charge, I urge you to demand a Full refund of your $150.00, if they refuse, don't give in, and if required use the help available to you to fight this.

“I shall continue to pursue this matter, reporting my findings to The Office of Fair Trading, and the ACCC, in the hope that Telstra will Voluntarily refund all of the payments taken from Customers who have paid for the iPhone Outright and Paid the ridiculous $150.00 iPhone unlocking charge.”

At this point, “mac user” apologises for having gone on “for soooo long, but I need to record my events somewhere”.

Well, it’s remarkable that his persistence and application of relevant acts caused Telstra to unlock the iPhone 3G free of charge.

I’ll be personally requesting a comment from Telstra on this case to see what they have to say about it, but if “mac user’s” story is true (and I have no reason to doubt it), it could easily be the case that Telstra cannot charge a $150 unlocking fee and could have to refund the fee to anyone that has paid it.

I’ve asked “mac user” to get in contact with me directly as well. It looks like it’s a stunning case of sticking up for your rights, and insisting that you get what you paid for.

In this case, what was paid for was an outright purchased iPhone that should mean just that: an outright purchased iPhone, one which can be used on any compatible network, just like any other outright purchased phone on the market today.

As noted, I will be contacting Telstra for comment, as well as speaking to "mac user" further. I could contact Apple as well for comment, but given their usual comment is "no comment", Telstra (and other regulatory bodies), along with "mac user" himself, is the next best step.

What iHappens iNext will be iVery iNteresting iNdeed! Stay iTuned...


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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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