Vodafone wins round against iPhone in Germany
News Info 21.11.2007PARIS: Last month, Apple was forced by French law to promise that consumers could buy a version of its much-hyped iPhone here without having to be locked into a long-term contract with Orange, the only mobile phone operator offering the new device.
Now, the same issue is tripping up Apple's plans to sell the music-playing cellphone in Germany, the largest European telephone market. Last week, Vodafone won the first step in a legal case against T-Mobile over its exclusive deal to sell the iPhone there.
Because of the court ruling, T-Mobile will have to offer the iPhone to everyone, even without the 24-month contract that it has required for buyers of the €399, or $575, cellphone, since it went on sale in Germany on Nov. 9. T-Mobile is appealing the ruling.
Vodafone, a British company, had tried to secure its own pan-European exclusive deal with Apple for the iPhone. A Vodafone spokesman, Simon Gordon, said the company was not trying to block the sale of the device but rather trying to level the playing field in Germany. Vodafone operates Vodafone Germany, the No. 2 German carrier. T-Mobile is the industry leader with 34 million customers.
The conflict in both Germany and France is over the principle of “tying.” Various countries in Europe have laws that protect consumers from being forced to buy a product on the condition that they buy something else as well. Britain does not have the same kind of restrictions, allowing O2 to sell the iPhone there with a 18-month exclusive contract.
“This shows how nervous some people are about our selling the iPhone,” said Klaus Czerwinski, a spokesman for T-Mobile in Berlin.
The carrier, a subsidiary of Deutsche Telekom, refused to disclose the number of iPhones it has sold, except to say that first-day sales exceeded 15,000.
The sale of “unlocked” phones that can be used with any cellphone carrier, or with prepaid calling cards, will hurt Apple as well as the exclusive provider. Apple's contracts now call for it to get a share of the monthly revenue that carriers generate with the iPhone.
As a result, Apple has built the device to prevent consumers from replacing the subscription chip, called a SIM card, that contains the billing and usage information.
Although Apple has announced sales plans only for the three largest European markets, restrictions on whether carriers can lock or subsidize phones also exist in several other Continental countries, including Belgium, Italy and Finland.
T-Mobile's position is that locking a mobile phone to a contract with one provider is rare but not new in Germany, while Vodafone argues that all mobile phones sold there can be used with any provider. Although T-Mobile insisted that iPhone sales would continue uninterrupted, it also warned that it reserved the right to pursue damages from Vodafone.
Czerwinski said T-Mobile planned to disclose on Wednesday specifically how it would comply with the court's order.
In France, the iPhone is scheduled to go on sale next week. But the exclusive carrier here, Orange, a subsidiary of France Télécom, has not disclosed any details of the purchase, like the minimum length of the contract, or the cost of the unlocked model of the device. Béatrice Mandine, an Orange spokeswoman, did not return phone calls seeking comment Tuesday.
Carolina Milanesi, European mobile analyst for the consulting company Gartner, said rumors that the unlocked price would be €999 were “ridiculous.”
“It's a €399 phone, whether or not it is subsidized or comes with a calling plan,” she said.
The iPhone competes most strongly with models from Nokia and Sony Ericsson, which have the widest offerings in phones that combine digital music players and cellphones, according to an analysis released this month by M:Metrics. At the same time, the consultancy said that the demand for premium phones and features was stronger in Europe than in the United States.
Cédric Manara, a law professor at the Edhec business school in Nice, noted that French law had been consistently against tying behavior.
A French court ruled against Sony a year ago for requiring that songs sold in its online music store be played only on Sony devices. Apple faces a similar court challenge in France over its iTunes songs, which are tied to the iPod. The iPod's music- and video-playing features are built into the iPhone.
Manara also said that under French law, mobile operators must allow subscribers to unlock phones for security reasons.
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