New “unlocked” iPhone is a no-go for Sprint, Verizon

Well, the rumors were true. Apple has indeed begun stateside sales of an “unlocked” iPhone that will work on any compatible carrier—”compatible” being the key word.

Among the incompatible carriers, unfortunately, are Sprint and Verizon Wireless.

The unlocked iPhone 4 unceremoniously appeared on the online U.S. Apple Store early Tuesday—a day earlier that the rumors had suggested—for an eye-popping $649 for the 16GB iPhone 4 or $749 for the 32GB version.

Why the sky-high price tags? Because the unlocked iPhone 4 is a no-contract phone that isn’t “locked” to any one particular carrier—which, unfortunately, also means you won’t be getting any carrier price breaks.

The $199 and $299 iPhone 4 models on sale through AT&T and Verizon come with mandatory two-year contracts, along with generous carrier subsidies to sweeten the pill.

The beauty of an unlocked phone (get the scoop on what “unlocked” means right here) is that you can simply pick one up, insert a working SIM card (or a smaller “micro-SIM” card, in the case of the iPhone 4), and start making calls—perfect for those who want to use an iPhone with a non-iPhone carrier (like T-Mobile), or jetsetters who want to use cheap, local SIM cards while making calls abroad.

Standard SIM card and the iPhone 4's smaller micro-SIM, compared

What’s the catch? The new, unlocked iPhone is designed only for GSM cellular networks, like those operated by AT&T and T-Mobile.

Sprint and Verizon both run CDMA networks, which are incompatible with GSM networks and don’t even use SIM cards. (Indeed, any phone used on Sprint or Verizon must be specifically programmed to work on their respective networks.)

That means the unlocked iPhone 4 can’t be used on Sprint or Verizon—and for that matter, it won’t work on Boost Mobile or Virgin Mobile, two pre-paid carriers that also employ CDMA networks.

(Just to be clear, Verizon does offer a no-contract iPhone 4 starting at $649, but it’s still “locked” to Verizon’s network.)

That said, you can always snag a pre-paid micro-SIM card from AT&T, T-Mobile, or any number of other pre-paid carriers carriers (they’re available for a buck and up on Amazon), plug it into your new unlocked iPhone, and start chatting away.

A couple of quick caveats about using 3G data on an unlocked iPhone:

1. You’ll need a data plan associated with your micro-SIM card to surf the web, stream music, or otherwise consume cellular data on an unlocked iPhone. If you’re using a post-paid micro-SIM card and you start surfing away without a data plan, you may get hit with exorbitant data fees, so easy does it. Another option: skip the data plan and only use Wi-Fi data. To do this, tap Settings, General, Network, and then flip the Cellular Data switch to Off.
2. While you can access data on T-Mobile’s network through an unlocked iPhone, the iPhone 4 doesn’t support the proper frequencies for T-Mobile’s speedy 3G and 4G networks. That means you’ll have to settle for the slower EDGE network, which is OK for email and light web surfing but a non-starter for streaming music or video.

Got more questions about the unlocked iPhone 4? Sure you do. Leave ‘em below, or shoot me an email.

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