Just a short time after New Jersey teenager George Hotz announced he had unlocked Apple's iPhone and enabled the popular smartphone to be used on networks other than AT&T, an Ottawa company has upped the ante by simplifying the technique and adding a YouTube hack.

Bobby Tzanev, the chief technology officer of web development company Atomic Motion, has been able to hack into the iPhone without going through the difficult soldering process employed by Mr. Hotz, by using a paper clip to connect the appropriate points in the phone. The smartphone can now be used with any GSM provider, of which only Fido and Rogers qualify in Canada.

On top of that, Mr. Tzanev says the local company has developed a hack to automatically convert YouTube videos into a format the the iPhone can use without connecting to AT&T, which has an exclusive distribution agreement with Apple in the United States and offers a proprietary service to enable video streaming from the popular user-uploaded video site.

"Every Canadian can now go to the States, purchase an iPhone, bring it back to Canada, unlock it and use it here," says Mr. Tzanev. "It's probably the hottest phone right now, everywhere, and millions would probably love to have it in Canada, but unfortunately because of the agreement with AT&T, they couldn't take advantage of the technology until now."

The hack, which Mr. Tzanev says had merely been a "weekend project" for him, involves bypassing some of the built-in hardware locks inside the phone to upload the new software, activating the phone using a tool freely available on the Internet, then uploading the software to get access to the iPhone's operating system. Then, certain files in the operating system must be modified in order to make the phone work on other networks.

"Theres's a massive market for this product: they're selling cracked phones on eBay for $4,000 US," says Atomic Motion CEO Dan Cummins. Regular iPhones which haven't been unlocked sell for up to $550.

The Atomic Motion team says their hack is especially unique because of the YouTube tool, which Mr. Tzanev says he hasn't seen anywhere else.

"I've seen discussion boards that say there are similar hacks on the Internet somewhere, but I haven't seen one myself," he says.

Both Mr. Cummins and Mr. Tzanev say they haven't really decided what to do with their hack, although they have a vague notion of setting up a plan to offer a reprogramming service for Canadian iPhone users for a fee.

Are they worried about the legal implications of cracking the code?

"At this point, no, based on the fact that Rogers Wireless and Fido have welcomed the notion here in Canada; I believe Rogers has said, 'Bring it on,' they love it," says Mr. Cummins. "People still have to legally purchase the phone, and then it's their product and they're simply not choosing to run it on AT&T."

This isn't the first time Atomic Motion has found a flaw in a popular system – the company claims that it spotted a critical issue with Microsoft Outlook that someone else also discovered six months later, to much wider press coverage.

"We want to be at the forefront of anything to do with web technology and new software and products that connect to the web, and to play with the product to improve or find flaws in it," says Mr. Cummins.

For now, they're still working on an iPhone hack which will be purely software-based and allow them to access the phone without opening it up physically.

"We definitely have a plan of action, and within a few days, if everything goes well, we should have an open phone using a pure-software method," says Mr. Tzanev.