> it's actually the telephone company which owns the iPhone
I hate to do this, mostly 'cause I like you, but that's simply not true - by precedent. To give two good examples:
1. Your home. If you're paid and current with your mortgage and the bank has not foreclosed and taken possession then the lending agency can not grant rights.
2. Your car, just like the above. The dealership or credit agency can not give the police permission to search your vehicle. Well, they can. It won't hold up in court.
So long as you're current then you have most every right you'd have with complete ownership. You own your house even while the bank owns it. You have the deed, they have a lien on the deed. The same thing for your car if it is not yet fully paid off. I'm not positive but I strongly suspect that if you're incarcerated and unable to make your payment then they still can't give permission to search.