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Information Technology News Court says T-Mobile can keep iPhone locked
Information Technology News Court says T-Mobile can keep iPhone locked | Court says T-Mobile can keep iPhone locked |
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| by Stephen Withers | |
| Wednesday, 05 December 2007 | |
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Following the Hamburg Regional Court's ruling, T-Mobile has resumed selling only locked iPhones with two-year service contracts, though they will be unlocked on request at the end of the contract period for no additional fee. Germans can still take a day trip to France, when unlocked, no-contract iPhones are available from Orange at €759. T-Mobile may seek damages from Vodafone, though given the high price it charged for unlocked iPhones and the short period they were on sale, it's hard to see what losses it suffered other than costs associated with the court case. Indeed, Dow Jones Newswires reports that T-Mobile managing director Philipp Humm has said selling iPhones without contracts has not hurt the business. A Vodafone spokesperson said its intention was "to ensure clarity on the commercial position in the German marketplace," and that the company would study the ruling closely. SIM locks and contracts are normally used to provide carriers with an opportunity to recoup the cost associated with subsidising handset prices, and so it is just between the carrier and the customer. With the iPhone, the situation is more complicated. Although Apple has tried to present the price of the iPhone as unsubsidised, in reality part of the company's revenue comes from a share of the service fees paid by customers. So the iPhone is subsidised, but by its maker not the carrier. A portion of the surcharge on unlocked iPhone previously sold by T-Mobile and still being sold by Orange presumably flows straight to Apple. From an economic standpoint, long-term contracts and SIM locks are undesirable as they add friction to the market, slowing customers' ability to react to changes in market prices or to new products. Consumers may put up with these restrictions in order to reduce the upfront cost of a new phone, or if it is the only way of buying a particular handset. The main disadvantage cited concerning the use of an iPhone with a non Apple sanctioned carrier is that the visual voicemail feature won't work. Apple is being sued for patent infringement over this feature.
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