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iPhone
French Regulators Rule that iPhone Must Be Available to All Carriers
Wednesday, December 17th, 2008 at 4:26 PM - by Bryan Chaffin
Regulators in France issued a ruling Wednesday that Apple must end its exclusive distribution deal with French cell carrier Orange, and make the iPhone available through other carriers in the Gallic state. The ruling is effectively more of a temporary injunction while the Competition Council further examines a complaint made by, Bouygues Telecom, a company not doing business with Apple.
Though it may seem like something reminiscent of Atlas Shrugged, the ruling effectively forces Apple to allow any and all comers -- in this case Bouygues and SFR -- to sell and carry the iPhone, whether or not the company finds that the operator meets whatever criterium the company had established. The ruling goes into effect on Thursday, just in the nick of holiday-spending time.
The Washington Post reported that Orange's parent company France Telecom has publicly complained that the ruling will, "undermine Orange's efforts to develop high-speed mobile services in France." The company also accused Bouygues waiting until the last moments of the holiday buying season to ask for the measure, as the appeal France Telecom is filing will take some time to complete.
Apple began selling the original iPhone with exclusive deals in all of its markets, as the company was looking for royalty kickbacks from the monthly plans from its partners. Because the company was selling the iPhone at a loss at the retail level, the company saw the exclusivity deals as essential to turning a profit on the device.
As more than one European country ruled that Apple and those partners had to also offer the phone in an unlocked version -- something France had already done -- Apple moved to a more traditional subsidy-based arrangement for the iPhone 3G. The retail price of each iPhone started at US$199, with the carrier getting the contract supplying as much as another $400 to Apple.
On its face, the ruling from the Competition Council won't threaten that model. Apple might have to allow Bouygues and SFR to resell its iPhone, but those companies would still have to pay Apple the same sort of subsidies paid by Orange. What it doesn't do, however, is address such issues as Apple's performance claims for the iPhone in France, claims based on the infrastructure of Orange, on competing networks that may not have the same capacities.
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