iPhone theft is rampant. Here at GadgetTrak we have done our best to create an application to assist with theft recovery of the device, even providing our iPhone application for free, however due to limitations of the SDK we are restricted in what we can do right now on the device, without background processes or other hooks like those that the Blackberry and Windows Mobile provide we will not be able to offer the same level of protection as we offer for other platforms.

From our research we have found that although there are limits to what we as a third-party can do to help victims of iPhone theft, both AT&T and Apple could do a lot more themselves. We have also found that both AT&T and Apple actually benefit from the theft of an iPhone.

So you have your new iPhone and you only paid $99 for it, what a deal. What people forget is the $140 plan that you pay for, which offers the same features as the $50 a month Blackberry plan. AT&T subsidizes the iPhone and Apple gets an additional cut of that monthly service fee as well. That $99 phone will actually cost you $3,600 over the life of the 2 year contract.

Now what happens if your iPhone is stolen? AT&T must offer insurance for mobile phones right? Yes, AT&T does offer insurance which covers theft and damage for their phones at $4.99 per month, the problem is that it covers all phones EXCEPT the iPhone:

http://www.wireless.att.com/learn/basics/choosing-features-services/wireless-insurance.jsp
“Wireless Phone Insurance is not available for and does not apply to: Apple iPhone™ (all models), Phones on GoPhone® or netbooks.”

Most people assume that they are somehow covered by AT&T or Apple in the event of theft, but this is not the case. If your iPhone is stolen and you wish to replace it you will need to pay the full actual price of $399 for the base model. If your phone is stolen, it also does not relinquish you from the two-year contract, you can remove the data plan and the texting, but will be stuck with AT&T until the end of your contract unless you pay the $175 termination fee.

With all of the GPS capabilities on the phone, AT&T and Apple can help me get my phone back from the thief right? Yes, they could, but they won’t. If you opted for the additional $99 MobileMe account from Apple then you may be able to locate your phone and even wipe data from it remotely, however this feature is easily disabled by the thief by just turning it off, removing the MobileMe account from the phone, or if the device does a full reset. This is a good start, but it is not meant for theft recovery, Apple does not advertise this as theft recovery either and when your device is actually stolen they will not help you in any way to recover the device.

What about the AT&T, if they can find people who are missing can’t they find my stolen phone? Yes, they can, but they won’t. Every phone has a unique device ID called an IMEI (International Mobile Equipment Identity ), this is transmitted to cell towers along with other information I will get to a bit later. So yes a carrier can track a stolen phone, but the resources it takes for doing so are a key reason AT&T and other carriers will not do so, willingly.

The next thing you would expect is that AT&T at least block your iPhone from their network right? So the jerk who stole it can’t just go sign up or use the phone on their network. No again, the IMEI number that is transmitted to the cell towers can be blocked, but AT&T is not doing it. In addition to the IMEI number other data is passed to cell towers, one is the IMSI (International Mobile Subscriber Identity), this is your subscriber ID and it resides on your SIM card, which is a little card in your phone on the inside of the battery compartment.

When you deactivate your phone with AT&T they only deactivate this IMSI, making it so the person who stole your phone cannot make calls on your account, the phone at that point will not function. However, all the thief needs to do is put a new SIM card in your phone now the phone is fully functional again. In addition the person who stole the phone will still be be able to access the email accounts you have setup on the device, so if your phone is stolen immediately change all of your email passwords.

Could AT&T actually block the phone from their network? Yes they can, but they are not doing this currently, however they could do this quite easily if they chose to. For example in the UK they tackled the issue of mobile phone theft when it reached epidemic proportions. A blacklist database was setup that carriers use to put the IMEI numbers of stolen phones. The blacklisted data is a shared national database that all of the carriers both submit data to as well as read from called the Central Equipment Identity Register (CEIR ). This is a national database, which holds details of all mobilephones that are reported lost or stolen within the UK.

Once a mobile phone is reported lost or stolen, the respective network provider (Vodafone, Orange, T-Mobile, O2, 3, or Virgin) will submit the details of the mobile phone to the CEIR database, which aims to ‘block’ the mobile phone across all UK networks within 24 hours.

US carrier could just as easily block all stolen phones reported to them by their customers using the same approach, they do not need to have a shared database for a few reasons. Carriers lock the phones that they sell to their network. When a carrier subsidizes the phone they sell you they also lock the device to their network, meaning you can’t switch from AT&T to T-Mobile. You can unlock your phone, but you have to pay to do it and it is a bit of a hassle. If a carrier such as AT&T were to at the very least not allow a phone that has been reported stolen by one of their customers to access their network, it would at the very least be a deterent to mobile phone theft, specifically iPhone theft in AT&T’s case.

Are there workarounds to this blacklisting? Yes, in fact although the UK was able to decrease mobile phone theft substantially it was not fully stamped out as they started to discover boxes of stolen phones were being shipped to Russia and other countries, as the blacklist was only in the UK, once connected to a network outside the country the blacklisting would not work. However, it did stop casual theft and made UK consumers shy of buying mobile phones on the black market. Sure there are ways to modify the IMEI, but this takes some technical skill and knowledge. The steps the UK have taken at least make it difficult for thieves to make a quick profit from stolen phones. Now stolen laptops, that is another story.

When an iPhone is stolen, Apple profits from the victim of the theft as the Apple lover will grudgingly buy a new iPhone at the full retail price. AT&T profits as the new owner of the iPhone be it the thief or whoever they sell it to will sign up for a new AT&T account and for those iPhone losers who do not wish to continue with their plan will have to pay a $175 cancellation fee, which basically pays for the iPhone that was stolen. Apple and AT&T in many respects are following a similar business model to that other group who refer to their customers as users.  Drug dealers. The first one is free ( or cheap ) after that you will pay.