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December 30, 2009

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iPhones go back on sale in New York

AT&T Inc suspended online sales of iPhones to New Yorkers over the weekend for unknown reasons, then started selling them again just as mysteriously on Monday.

Spokesman Fletcher Cook said only that the phone company periodically "modifies" its distribution channels. He had no further comment on the resumption in sales, and officials with Apple Inc did not immediately return messages for comment.

Bloggers speculated that the sales suspension was a means of managing data traffic, since AT&T has acknowledged that its network is overburdened with iPhone users in New York and San Francisco.

However, because the phones were still available in New York retail stores and from Apple's Website, the ban may have instead been an attempt to curb buyers who renege on the service contracts and resell the phones to customers of other carriers overseas.

On AT&T's Website, buyers who supplied New York City post codes were told on Monday to "Please shop for another phone." By afternoon, though, the Website raised no obstacles when the same post codes were supplied.

It was not clear whether the iPhone suspension had applied to all New York post codes or just certain ones, nor was it known why New York was targeted.

AT&T sells a new iPhone 3GS with 16 gigabytes of memory for US$199, with a two-year contract requirement. A buyer who doesn't pay the monthly service fee is assessed a US$175 early contract termination fee, but that still leaves room for a reseller to profit. The phone sells for US$600 on eBay after it has been modified to work with the networks of overseas carriers.

In November, AT&T competitor Verizon Wireless doubled its maximum early contract termination fee for smart phones to US$350 partly in a bid to protect itself against resellers.



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