Mobile devices Toolkit

Apple's iPhone exclusivity plan unravels

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David Meyer ZDNet.co.uk

Published: 22 Nov 2007 15:45 GMT

Apple and T-Mobile have been forced to allow an unlocked version of the iPhone to be sold in Germany, after the operator Vodafone won a court injunction.

Apple's unique tactic for its first foray into the cellular handset market has been to sign an exclusivity deal with one operator in each country where the iPhone has been released. In the UK that operator is O2, in the US it is AT&T, in France it is Orange and in Germany it is T-Mobile. Although the exact terms of these deals remain murky, it is clear that Apple uses their exclusivity to negotiate a share of the revenues generated by iPhone contracts.

Last week Vodafone went to the German courts to argue that Apple's deal with T-Mobile was anti-competitive. On Wednesday the court agreed to a preliminary injunction forcing T-Mobile to sell iPhones that are not locked to its network, meaning that SIM cards from rival operators will be usable in the devices. Any iPhone sold in Germany since 19 November will have to be unlocked, free of charge, by T-Mobile if the customer requests for this to be done.

T-Mobile Germany is therefore now selling an unlocked iPhone for €999 (£719) — its price with a 24-month contract is €399 (£287). A court in Hamburg will hear the case in full next month.

In a statement released on Wednesday, T-Mobile said it had no choice but to comply with the ruling. "The legal conditions are attributable to an injunction submitted by competitor Vodafone D2, who was behind T-Mobile in the race to sell the Apple iPhone in Germany," read the statement. "T-Mobile will meet this requirement until the legal aspects have been clarified."

However, T-Mobile argued in its statement that the iPhone's "visual voicemail" feature is still only available through the T-Mobile network and the 24-month contract through which the iPhone is offered. The provider also claimed that its Edge network — the data connectivity technology used by the iPhone — has 100 percent coverage "in the entire T-Mobile network" in Germany.

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A spokesperson for Vodafone told ZDNet.co.uk on Thursday that it had resorted to the courts not because T-Mobile had won the German iPhone contract, but in order to establish a "level playing field".

"We don't want to stop the sale of the iPhone. It's not about the iPhone itself — it could be any handset," said Vodafone's spokesperson. "In Germany, you cannot sell a phone on a long-term contract with the SIM locked in, because it is deemed anti-competitive." The spokesperson also suggested that T-Mobile's price for an unlocked iPhone was "astonishingly high", and confirmed that Vodafone would not be pursuing similar action here in the UK, where the regulatory landscape is different.

Similar regulations are, however, in place in France, where Orange is due to release an unlocked version of the handset — although its release date and price are yet to be determined.

Apple could not be contacted for comment at the time of writing.