Apple’s new Apple Upgrade program requires customers leasing an iPhone to connect it to AT&T, T-Mobile, or Verizon during enrollment, even though Apple provides the device through its own leasing arrangement and keeps every leased iPhone unlocked.
The requirement appears to come from Apple’s long-running agreements with the three largest US carriers, which reportedly pay the company hundreds of millions of dollars through annual marketing and sales programs. Apple then gives those carriers certain benefits, including stronger visibility in advertising, retail stores, financing offers, and special iPhone purchase programs.
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John Gruber at Daring Fireball shared details from a former Apple employee who worked on the company’s carrier team and said these restrictions form part of wider commercial agreements.
“Every year, the Carrier Teams at Apple negotiate a deal or program worth hundreds of millions of dollars with each of those Big Three. In return for those dollars, Apple will make concessions exactly like this, or similar.”
Carrier Deals and Fraud Checks Shape the Policy
The carrier requirement also gives Apple and its financing partners another way to check customer identities and reduce fraudulent purchases. Major carriers already run credit, account, and identity checks before approving postpaid service, which gives Apple an extra signal that the person leasing the iPhone has provided legitimate details.
A former Apple Store employee told Gruber that fraudulent iPhone purchases increased sharply after stores began offering carrier financing, with some buyers using stolen account information to obtain expensive models and resell them.
“As bad as it was with the activation requirement, it would be way worse without it. The carriers ate the cost for millions of dollars in devices they never got paid for.”
Customers must select an eligible postpaid account when joining Apple Upgrade, although the leased iPhone remains unlocked after activation. Apple says users can switch carriers later, subject to the terms of their new provider.
The policy currently excludes prepaid plans, smaller carriers, and most mobile virtual network operators, although larger providers may gain access if they negotiate similar commercial agreements with Apple.
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