Expect a software update from Apple soon, iPhone users — and a slew of lawsuits to follow. Today it was announced that a hard working team of developers have figured out a way to unlock the iPhone using only software. (Previously a few brave folks learned they could unlock the iPhone with some serious hardware hacking – soldering, scraping, and then more software hacking.)

To date Apple has not tried to stop people hacking its device – either the iPhone or the Apple TV. Apple TV updates have practically embraced the hacks people have come up with and the two iPhone updates that have been released so far still allow hacks, but only work on unhacked devices. (Forcing users to undo all the hacks before updating or suffer through a complete factory restore – i cried a little.)

However past hacks to Apple devices have never broken any of Apple’s revenue streams, or any other company’s revenue stream for that matter. If this one hack continues to work, it will definitely cut AT&T’s revenue, but it will also cut down Apple’s if rumors about them getting a 10% cut of all iPhone data plans is true.

But the issue isn’t that simple. Last year the Librarian of Congress (who, believe it or not has domain over this) said that unlocking GSM phones to work on other carriers is not illegal. So although it’s likely Apple and / or AT&T will try to sue the developers once their identity is discovered, it’s also likely this suit will get thrown out of court.

One interesting thing that was revealed through this process is that the iPhone 1.0.1 update added a hidden settings panel that lets users customize data settings. so unlocked iPhones can be configured to fully work on any network (except for visual voicemail). Could it be Apple is tacitly supporting these efforts, or is this something that was added because of Apple’s rumored multi-carrier agreement in Europe?

A special shout out to Carlo Longino and Craig Froehle for planting the seeds of this post in my brain.

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