The young cracker

Hackers around the world lusted over the possibility of unlocking the iPhone and allowing users to ditch AT&T’s exclusive service contract with Apple.

George Hotz, 17, of Glen Rock, N.J. finished the task just two days before he was to set off for his freshman year at Rochester Institute of Technology.

"Some of my friends said I wasted my whole summer," Hotz told Erin Burnett on CNBC. "It was and adventure. It was a great project. I learned from a lot of great people."

He told Burnett that he hacked the iPhone because his family has a T-Mobile family plan. "Those termination fees are murder." he said. This was a good use of my summer. It's not really about AT&T and T-Mobile."

Hotz apparently learned bartering the process. The hacked iPhone was traded for a 350Z Nissan sports car and three 8 gigabyte iPhones. According to his blog posts, he encountered problems with eBay and resorted to posts on his blog to unload the device.

The buyer was Terry Daidone, the founder of Certicell, a company that specializes in refurbished cell phones.

As a result of a collaboration between Hotz and several online friends, the job was completed in about 500 hours. The 10-step process is explained on his blog Finding Jtag On the iPhone

Experts predicted that Apple, the developer of the iPhone or AT&T may file a lawsuit to stop distribution of the information or sale of the phone. But Hotz downlplayed it as did technology writer John C. Dvorak. Hotz said reverse engineering or hacking a cell phone is not against the Digital Millenium Copyright Act.

"He won't be hearing from AT&T or Apple," Dvorak predicted.

Other companies may not be so lucky.

At least two companies were planning to release software-based cracks that will allow iPhone to operate on other networks.

• uniquephones - They have been ordered to cease and desist by the carrier's lawyers. Uniquephones, a Belfast-based cell phone service that boasts having unlocked phones on more than 600 mobile networks, had been planning to sell its software download Sunday.
• Engadget's Ryan Block reported Friday that iPhone•Sim•Free.com/ had unlocked the phone with a small piece of software.

On Saturday Engadget reported that AT&T lawyers had pressured UniquePhones not to relapse the software. UniquePhones said it was weighing its options in the event the company was blocked from releasing the software.

Reverse engineering the phone underscores some important issues for consumers.

Apple and AT&T exclusive deal prevents phone users in foreign countires that don't have access to AT&T from using the iPhone.

Exclusive marketing deals force prices to be artificially high.

Technology advocates contend these exclusive and expensive deals show a blattant disregard for consumers. The deals show that developers of the devices are concerned more about maximizing profits that getting truly useful technology into the hands of as many people as possible.

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