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iPhone Business Model Hits a Snag in France 332

Posted by Zonk
from the open-is-as-open-does dept.
Serhei writes "It seems like the iPhone might not be released in France by this holiday season, since French requires by law that all cell phones sold there must be obtainable in an unlocked version. Apple will not be able to do so, since it has launched with a 5-year exclusivity agreement with AT&T. That deal will probably require exclusivity worldwide to avoid grey-market imports. (In return for this agreement Apple receives a large share of AT&T's monthly revenues from iPhone subscribers.) If the iPhone falls through in France, the country can join Belgium and a potentially long list of other countries with unlocking laws, whose Apple fans will have to make do with other, less Apple-y phones. Note that there is currently no mention of the iPhone on the Apple France page."
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iPhone Business Model Hits a Snag in France

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  • Good news! (Score:5, Insightful)

    by OdinOdin_ (266277) on Saturday October 06, 2007 @05:38PM (#20882685)
    This is excellent, it means those EU countries which won't accept iPhone will have to churn out something thats a whole lot better, this is good news for consumers!
    • Re: (Score:2, Redundant)

      by jabuzz (182671)
      I am sure that Apple are in legal hot waters in the entire E.U. It is my understanding that tying the sale of one product (the iPhone) to another (a mobile phone contract) is illegal anywhere in the E.U. Probably why phone unlocking is common place in the E.U. You can get around it to some extent if the phone is being subsidised by the mobile phone company. However by all accounts this is not the case with the iPhone.
      • Re:Good news! (Score:4, Informative)

        by Richard_at_work (517087) <richardprice.gmail@com> on Saturday October 06, 2007 @06:30PM (#20883093)
        You understand wrong - there is no EU wide law making the tying of products illegal, otherwise the entire mobile market in the UK would have been in deep shit years ago.
        • Re:Good news! (Score:5, Informative)

          by anticypher (48312) <anticypher AT gmail DOT com> on Saturday October 06, 2007 @10:19PM (#20884467) Homepage
          There are no EU wide laws. There are directives, from which countries create their own versions as laws that meet local customs, historical precedent, and local lobbying/corruption influence.

          There are strong anti-tying directives, to keep the american-style business model (microsoft, walmart) from damaging the economy here. France has consumer protection laws at least as strong as those in Germany, and most countries here have varying levels of enforcement. The UK has some of the weakest consumer protection laws, and with OfCom, no enforcement whatsoever.

          I've been hearing more iPhone rumors this week, the biggest is T-Mobile has put their rollout plans on hold because they could not show the regulator the required unlocking function or unlocked phones. O2 in the UK is safe, because even though they will be violating laws there, the fines will be years down the road and only then a tiny percentage of the profits made.

          There are no other populous countries in Europe where the iPhone could be sold without an unlocked version. Apple has really shot themselves in the head with this move. By locking themselves out of the largest GSM market in the world, they can't hope to achieve any kind of marketshare.

          the AC
    • Re: (Score:3, Insightful)

      by jcr (53032)
      good news for consumers!

      No, it means they can't get a product they want. It doesn't mean that they can get the product on different terms than the rest of the world can.

      -jcr
      • by polar red (215081)

        It doesn't mean that they can get the product on different terms than the rest of the world can.
        450 million costumers = they'll change the business model.
        • 450 million costumers? Man, I knew the EU was into theatre and Hallowe'en is fast approaching, but that seems a little high to me...
      • Re:Good news! (Score:5, Insightful)

        by timmarhy (659436) on Saturday October 06, 2007 @07:36PM (#20883517)
        what are you dense or something? apple isn't holding france to ransom over the iphone, apple is missing out on sales in france. you have the issue back to front my friend.
      • So HTC makes the Tornado. Mine says T Mobile SDA. In other countries it's an SDA Music or SDA Music 2. It's also sold with slight variation as i-mate SP5m, QTEK 8300, and Xda Xphone.

        What's to stop Apple from creating an EUPhone which is similar to the iPhone but not really the same product? Is Apple tied on all of it's phones world wide to AT&T or just the iPhone models? Or can they release a different phone in EU?
    • by janrinok (846318)
      There are many phones that are available in Europe which still don't seem to have seen the light of day in the States. We're not short of choices. Now I'm not sure what particular iPhone capability is seen as being the world beater (I'm one of those old, boring people who just uses my telephone to talk to people....) but I feel that there is still plenty here to make iPhone much harder to sell than perhaps it is in the US.
      • The interesting thing about the iPhone was how it differed from all those products you can get in Europe. Actually, I was just there for two weeks, in wonderful Italy. I had to buy a Vodaphone unit, since my stupid iPhone got no service there. The Vodaphone sales guy got very excited when he saw my iPhone, and gathered the other sales guys around for a demo. Of course, my iPhone was much cooler than regular iPhones... I had the awesome Summerboard launcher, the Books e-book reader, games, a VNC viewer (
      • by mdwh2 (535323)
        (I'm one of those old, boring people who just uses my telephone to talk to people....)

        I'm someone who rarely uses my phone for actually talking to people - but I still don't see what the Iphone brings to the table. If you want email, web browsing and mp3s on a phone, any old dirt cheap phone does that at a fraction of the cost. If you want to run native applications and have a general mini-computer, smart phones have been around for years.

        Also, here in the UK at least, it's common that you either pay for a
    • by 4D6963 (933028)

      This is excellent, it means those EU countries which won't accept iPhone will have to churn out something thats a whole lot better, this is good news for consumers!

      Oh yeah, a good thing consumers there have less choice, they never buy what's best for them, unlike us who know better, it's a good thing their choice is being restricted to what we deem better for their clueless self.

      • by timmarhy (659436)
        EU is the land of unlocked phones and your trying to tell us THEIR the ones with a lack of choice? are you seriously suggesting that a locked phone == more choice?

        if you believe such things, then i have some moon land to sell you....

    • Re: (Score:2, Insightful)

      by ZoneGray (168419)
      Good news for consumers... unless they're in Europe and want an iPhone.

      Let me get this straight.... you REALLY think such regulation would prompt somebody to make a better phone than Apple?

      Why would they?

      They no longer have to!

      If I were a phone maker, I'd say, "Thank you for locking out our toughest competitor."

      Score another one for corporations who scam consumers into thinking regulation is good for them. Pay attention, this is how it's done folks.
    • by SeaFox (739806)

      This is excellent, it means those EU countries which won't accept iPhone will have to churn out something thats a whole lot better

      I don't see how. If Nokia, Samsung, etc don't have to worry about competing with the iPhone in Europe (thanks to Apple's marketing blunder of signing up with AT&T), what pressure is there for them to make a better product?
  • by Anonymous Coward
    Look at the German page, you'll see that T-Mobile is the exclusive carrier there.
    • by Divebus (860563) on Saturday October 06, 2007 @05:46PM (#20882745)
      See? We should have let the Germans keep France.
    • Re: (Score:2, Informative)

      by Anonymous Coward

      Look at the German page, you'll see that T-Mobile is the exclusive carrier there.

      Yes, but the German version will be locked to T-Mobile Germany, so this is no competing product to AT&T in the US. But if an unlocked version would officially available in France, nothing would stop people from reimporting them to the US and using it there, without the control of AT&T. So the (not world wide but US) exclusive deal of AT&T with Apple might prevent Apple from offering an (official) unlocked version anywhere.

    • The summary is a bit off on that point. But I imagine Apple will still hold out, with Orange, for the best deal they can leverage.
  • by Divebus (860563) on Saturday October 06, 2007 @05:43PM (#20882719)
    Exclusivity deals with a sub-desirable carrier is working against Apple but "Designed in the USA" is probably hurting them worse in France. Next.
    • by moosesocks (264553) on Saturday October 06, 2007 @08:29PM (#20883869) Homepage
      Oh come now. Although I don't want this to turn into a political flamewar, France doesn't have any sort of pervasive hatred toward Americans.

      Yes. France disagreed with the U.S. about Iraq (and yes, even though their reasons for doing so weren't the most honorable, it's fairly safe to say at this point that they were on the "right" side of the debate). However, this was a criticism of a matter of foreign politics and policy, and not some sort of personal vendetta against the entire population of America (especially those evil industrial design firms in California!)

      It was the US who took the issue way too far. Even though it was a joke, serving "freedom fries" in the senate cafeteria was terribly crass.

      Surprise! The world does not hate Americans by default. Most of them don't approve of what the government's doing, but neither do 70% of Americans these days.
    • by AHumbleOpinion (546848) on Sunday October 07, 2007 @12:18AM (#20885035) Homepage
      "Designed in the USA" is probably hurting them worse in France.

      Actually Apple is popular in France, major executives have been French.

      You might also check up on current events, when French and German citizens got to vote the results turned out a bit different than what the mass media wanted to portray. Candidates friendly to the US won.

      When I was in Paris last year I was treated very well. Even though my French language skills are nearly non-existent. Disagreeing with a government's policy decision does not translate into a population hating companies or citizens.
  • something is missing (Score:5, Informative)

    by microcars (708223) on Saturday October 06, 2007 @05:44PM (#20882725) Homepage
    I find it very hard to believe that Apple Legal did not see this coming.

    also- from the link, the "5 year exclusivity agreement with AT&T" is only for US Distribution.
    • by Tim C (15259) on Saturday October 06, 2007 @05:58PM (#20882855)
      from the link, the "5 year exclusivity agreement with AT&T" is only for US Distribution.

      Yes, hence the comment about grey-market imports. It's unlikely that AT&T would be happy with the iPhone being sold unlocked in any country, as those unlocked phones could then be imported into the US, despite the exclusivity agreement.

      No, it wouldn't be as easy as if the iPhone was available unlocked in the US, and yes there are ways to unlock an iPhone, but that's not the point. If I were at AT&T and negotiated the deal, I'd have made damn sure that Apple were bound not to sell the iPhone unlocked anywhere, to make it that bit harder to obtain an unlocked one. Remember, you don't have to make it impossible, just hard or risky enough that that people can't be bothered.
      • by Zeinfeld (263942)
        Yes, hence the comment about grey-market imports. It's unlikely that AT&T would be happy with the iPhone being sold unlocked in any country, as those unlocked phones could then be imported into the US, despite the exclusivity agreement.

        Happy, schmappy. AT&T knew what they were buying and Apple knew what they were selling.

        Nobody in this thread knows how long the AT&T exclusivity deal lasts or what restrictions there are on sales of unlocked phones in other countries. The article's claim of a

      • by SeaFox (739806)

        Yes, hence the comment about grey-market imports. It's unlikely that AT&T would be happy with the iPhone being sold unlocked in any country, as those unlocked phones could then be imported into the US, despite the exclusivity agreement.

        This is why marketing products differently, in different countries, in the 21st Century is stupid to begin with. With the Internet and FedEx, physical location doesn't mean anything in regards to availability anymore. This isn't the 1500's where getting electronics from a

    • They have Minitel in France, what do they need iPhones for?
  • US legality (Score:3, Informative)

    by jshriverWVU (810740) on Saturday October 06, 2007 @05:46PM (#20882755)
    Wasn't there a case this year and a law passed where phone could legally be unlocked by the consumer. Cell phones and printers [wired.com]
  • by mark-t (151149) <markt@@@lynx...bc...ca> on Saturday October 06, 2007 @05:52PM (#20882803) Journal
    But couldn't Apple have just prevented this whole mess if they had charged like $1500 for the iPhone, and offered a $750 mail-in rebate for purchasers who signed a 5-year contract with AT&T?
    • Re: (Score:2, Insightful)

      by Anonymous Coward

      But couldn't Apple have just prevented this whole mess if they had charged like $1500 for the iPhone, and offered a $750 mail-in rebate for purchasers who signed a 5-year contract with AT&T?

      Yes, but it would make more sense for them to just sell it with a five year contract. The mail-in rebate thing wouldn't add anything other than to put people off buying them.

      The important thing is that they can't prevent people using the phones on other networks. That isn't compatible with selling them with a five year contract that gives them access to a particular network, provided that they don't prevent people using the phones on other networks. Get it?

    • by chrysalis (50680)
      Please mod parent up. This is so obvious.
    • That would be the worst marketing decision ever, because customer's never see rebates as real money (and for a good reason). They see them as lottery tickets where after 6-8 weeks they might get back a small amount of money. Normally, they don't even send them in because they doubt they'll work, and in this case they wouldn't buy the product because they would see a $1500 phone with a tried and true bullshit $750 rebate that probably won't work. They'll also resent the extra step involved. Oh yeah, and what
      • by mark-t (151149)

        only a moron would pay $1500 to have an iPhone they could use with Verizon or T-Mobile or Sprint.

        ... or Apple fanboys that would pay whatever it took to own the latest Apple gadget.

        and finally people who didn't want to use AT&T would get hit hard and probably would just buy a new phone.

        How would they get hit hard? If they don't buy the iPhone they won't have spent the money, and AT&T isn't out anything because they weren't going to subscribe with them anyways.

        They see [rebates] as lottery ticke

  • errors in summary (Score:5, Informative)

    by venicebeach (702856) on Saturday October 06, 2007 @06:12PM (#20882969) Homepage Journal
    This has nothing to do with AT&T.

    Apple has already announced an exclusive deal in France with Orange (France telecom), and it's this deal that is in danger because of the law. Apple is partnered with T-mobile in Germany and O2 in Britain, so this really isn't about any worldwide exclusivity for AT&T.

    AppleInsider's report on this situation. [appleinsider.com]
    • by v1 (525388) on Saturday October 06, 2007 @06:43PM (#20883165) Homepage Journal
      That's actually a very good idea for them. The big argument right now is that Apple can't release an unlocked phone in another market due to grey market import of unlocked phones. Soooo, release it locked by another carrier in a new market. In this way the two markets do not compete, and yet consumers in both markets can obtain and use the product.

      This is probably Apple's original plan. A year from now we are very likely to see the iPhone for sale in 1/2 dozen markets, each locked to a single provider in that market.
      • Re: (Score:3, Interesting)

        by SeaFox (739806)

        That's actually a very good idea for them. The big argument right now is that Apple can't release an unlocked phone in another market due to grey market import of unlocked phones. Soooo, release it locked by another carrier in a new market.

        I don't see how this solves the problem brought up by this article. Apple can't just sell the phone locked to another provider, French law says it has to be available with NO provider as well, even if they do a partnership. If that happens a load of those unlocked Apple i

    • The iPhone's edge (Score:2, Interesting)

      I do believe the iPhone's edge is exclusively the UI, which Apple masters like no other computer manufacturer.
      Good ol'e Steve is convinced, however, that only a tied-up customer can be conveniently milked, and therefore will also bundle it with an exclusive operator contract.
      European customers were already fed up with the local operators, who were milking them to death via international roaming, before being forced to lower the price by an EU regulation (think of the FCC ever doing something like that...) n
  • by suv4x4 (956391) on Saturday October 06, 2007 @06:24PM (#20883057)
    Only months from now, the other companies competing on the cellphone market will release their brand new iPhone clones (Nokia, looking at you).

    What is the iPhone? It's just a phone with nice easy interface on a large touchscreen. It's not terribly hard to copy, nor is it illegal.

    If Apple decided not to sell in France and other countries because it can't have 100% exclusivity with one provider, the other companies will fill their niche just fine. The only loser is Apple themselves.
    • Re: (Score:2, Informative)

      by Anonymous Coward

      What is the iPhone? It's just a phone with nice easy interface on a large touchscreen. It's not terribly hard to copy, nor is it illegal.

      Nothing that Apple does is terribly hard to copy, but oddly, NOT A SINGLE COMPETITOR ever seems to actually "get" what Apple is really doing.

      Why is it that nobody but Apple seems to understand that too many features actually BREAK a product and reduce it to a tiny minority appeal (yes, looking at the slashdot crowd here)?

      Why is it that no competitors (except Palm, apparently, who employed a "click counter" for their Palm OS to keep it simple) appear to let anybody except ENGINEERS actually USE their equipm

  • So they will just get those cheap Chinese "clone phones" instead?
  • by gig (78408)
    For $3 a month Apple does a lot of things for iPhone customers that AT&T or other carriers have to do themselves for other phones. For example, if your iPhone needs service you call AppleCare not 611.

    The exclusivity is so the phone companies don't get to rape iPhone customers financially. Before you get to carry the iPhone you have to agree to flat-rate data and reasonable voice plans. Even though the iPhone is by far the most popular smart phone, it has the cheapest device plans. Treo users can choose
    • Re: (Score:3, Informative)

      by isaac (2852)

      Even though the iPhone is by far the most popular smart phone, it has the cheapest device plans. Treo users can choose carriers but they always pay much more.

      You are dead wrong.

      Sprint's unlimited Power Vision (3G) service is $15/mo for regular joes. We won't even mention the SERO plans that start at $30/mo for 500 minutes, unlimited data, unlimited SMS & MMS, unlimited mobile-to-mobile, and free nights/weekends starting at 7.

      AT&Tingular charges $20/mo for unlimited data with 200 SMS/MMS messages.

      Now

  • by zuki (845560) on Saturday October 06, 2007 @06:50PM (#20883219) Journal
    ...what are the terms of the deal that made Apple so giddy about 'locking in' with AT&T for FIVE YEARS!!!

    The argument is that Apple obviously has legal counsel who foresaw all of these problems (risk of class action, being made illegal in certain countries, etc...)
    Yet they do not have any problem doing this for what (in hardware evolution time) is several lives long, and they are basically risking everything on this gamble.

    What could it be that made the pot so sweet that they went with this deal on a debut product?

    And on the opposite side of the coin, what could have been so incredibly bad about offering the phone unlocked with a SIM card slot
    that they, -who pride themselves in public for being so 'open'- did not see that as a viable option?

    Do they act so arrogant that they don't even want to please all of the international travelers who swap SIM cards
    every time they arrive in a new country? Someone, please drop some science on us. As it is, it makes no logical sense.

    (Oh yeah, and BTW Steve, if you happen to read this, just email me the 411 directly...! KTHXBYE)

    Z.
  • You'd think (Score:3, Insightful)

    by FranTaylor (164577) on Saturday October 06, 2007 @06:59PM (#20883283)
    With all the corporate-induced environmental disasters, wars, etc. in the world, that people would find something more important to get excited about than the terms and conditions for a cell phone.
  • What? (Score:3, Funny)

    by sebastianboethius (457437) on Saturday October 06, 2007 @07:17PM (#20883407)
    If i were to meet steve jobs right now i would slap him.
  • I hate them (Score:2, Funny)

    by Anonymous Coward
    I hate French; not the first time they make us look so stupid.
  • All Apple has to do is make it so iPhones sold outside the US cannot be updated or synched with iTunes in the US. iTunes knows from your IP what country you are in.

    Sure, there are proxys, but this would shut out 99% of the problem. People couldn't just buy an iPhone in Europe and use it here theyd have to know what they were doing.

  • Apple themselves have stated its a 5 year contract, 2 year EXCLUSIVE deal, meaning they will be working with AT&T for 5 years, but only 2 of them will AT&T be the exclusive dealer.

  • I had no idea, first I've heard of it, that's a lifetime in technology years.
    That's one of the most stupid things I've ever heard of, how could Apple paint themself into a corner like that?

    (No, I'm not a pro-unlock person, I can see why they did it but for such a long period of time? Utter stupidity)
  • If this is true, it's going to scupper the UK deal as well. You don't have to provide the phone unlocked in the UK, but you do have to unlock it for the customer for no charge at the end of the contract -- which may be well before the end of the original contract period if, for example, charges go up during the contract.

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