iPhone Business Model Hits a Snag in France

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."

something is missing

[microcars]

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.

US legality

[jshriverWVU]

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]

Re:No worldwide exclusivity

[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.

errors in summary

[venicebeach]

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]

Re:Good news!

[Richard_at_work]

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.

$3 a month is a large share?

[gig]

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 carriers but they always pay much more.

But then again it's easier just to parrot what you read on the Internet instead of thinking about it for like 10 minutes.

Re:$3 a month is a large share?

[isaac]

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, yes, T-Mobile and Verizon suck for users of any smartphones - but it's wrong to say Treo users always pay more.

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[account_deleted]

Comment removed based on user account deletion

Re:Good news!

[anticypher]

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:Why iPhone can't be exclusive

[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 equipment beforehand, testing for unnecessary complexity and those little jarring moments that Apple spends such huge effort on eliminating and polishing into a seamless experience?

Why is it that almost no competitors appear to have the slightest concept of "style" and "taste"?

Sure, none of these things are terribly hard to copy, but it's rather tell-tale that in ten years that Apple has pursued a clear target in everything they've done, NOBODY has managed to approach the mixture of the above factors that makes Apple products so elegant and desirable.

I'm all for iPod Killarz and iPhone Killarz! Build me a better iPhone! I'll want it!

But it ain't gonna happen until you understand what an iPod or and iPhone actually IS, and WHY it's so good.

-chris.

a note: iPhone uses an ordinary SIM, in a slot

[Gary W. Longsine]

I'm not really sure why this myth continues to propagate. iPhone has a SIM slot. iPhone has a SIM slot. [apple.com] It's visible on the top of the phone, with a tiny pin hole. Inserting a pin or paper clip ejects the SIM card from the slot. You can use this SIM in any other GSM phone.

Re:Good news!

[tsa]

Spoken like a true American who doesn't have a clue about European law. Give me one example of the EU forcing a good product out of the market. Give me the definition of a 'good' product, and tell me what that has to do with the issue at hand.
You think you have a good phone selection? We can use any phone we want on any network we want. We have locked phones too of course, but the providers are required to unlock them if the contract with the customer has expired and the customer asks for it. This is to ensure that you can take your phone with you to another provider. I bet you Apple didn't even know that a few months ago. The European GSM market is at least twice as big as the market Apple will ever reach if they continue the way they are going in America, so I hope they come to their senses soon and start getting their priorities right. The only reason they have so many problems here is because of the new sophisticated voice mail they have invented. They were too far ahead of the time with that, so why not remove that feature and make the iPhone compatible with all providers?

Re:The iPhone will be known as Steve's Folly

[Anonymous Coward]

In the whole smart phone market Windows Mobile is also a small player. Symbian had 72% market share and sold 18.7 million in Q2 http://www.symbian.com/about/fastfacts/fastfacts.html [symbian.com]

But since the iPhone is not really a smart phone it should be compared to the whole cellphone market which is about 1 Billion per year!

Re:Good news!

[Tony Hoyle]

Except as any mac fanboy will tell you the iphone is not subsidised.

UK law is similar - an unsubidised phone must be unlocked and with a subsidised phone if you buy your way out of the contract they must provide an unlock code (http://www.ofcom.org.uk/static/archive/Oftel/consumer/advice/faqs/mobfaq3.htm)

A number of people are ready to challenge the apple policy in the UK once the iphone is launched there.

Re:France? Heh.

[sarathmenon]

Funny how the joke of this post was lost on the mods. For those unaware, arabic numerals are the same decimal number system, that everyone around the world uses.