Orange France loses its iPhone exclusive

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Orange France loses its iPhone exclusive

By CAROLINE GABRIEL

Published: 18 December, 2008

READ MORE: Orange | iPhone

Concern has been mounting that the iPhone's exclusive carriers, such as O2 UK, might lose that position earlier than expected, even by the end of 2009. This will depend on sales performance and the closely guarded small print of their contracts with Apple, but in France, Orange's exclusive is under premature threat from competition laws. The French Competition Council has ordered Apple and Orange to stop blocking sales of the iPhone for use on other networks, raising fears that similar rulings might affect other European carriers like O2 and T-Mobile Germany.

Although the French ruling is provisional, and will be appealed, it comes into effect, at least temporarily, from today, just in time for the last minute pre-Christmas shopping rush. Orange could face a rush of customers from its rival operators, SFR and Bouygues, to get their hands on iPhones - that is, if these carriers can get supplies in time.

A disgruntled Orange said in an official response: "It is ironic that the operator [Bouygues Telecom] which is most behind in terms of rolling out its 3G network initiated this complaint." Any appeal could take as long as a year to be decided.

The ruling may be specific to France, but it does raise more general issues that have been hotly debated since the iPhone made its debut, attached to firmly closed operator deals that seem retrograde in the age of open access. Although some of its second stage launches, especially in emerging markets, have been via multiple carriers - Vodafone, in particular, walked away from the tough terms of Apple's sole carrier deals - there are still serious questions over how the iPhone's business model will change in an open world.

Orange said the French ruling "will have a major impact on the market, and was taken without any in-depth examination of the situation ... Unfortunately, this decision may have serious consequences on manufacturers, as well as their subcontractors and software suppliers, sectors that are already facing economic difficulties."

One year into its deal Orange has sold over 150,000 first generation iPhones and over 450,000 3G iPhones in France.

Meanwhile, the original exclusive carrier, AT&T, has been pushing down the cost of grabbing an iPhone in readiness for the holiday season. Retail giant WalMart has begun a pilot program to sell the 3G iPhone, charging $197 for the 8Gb model and $297 for the 16Gb model from December 28, along with two-year contract with AT&T. After the new year, the retailer is expected to launch a special $99 4Gb model to address the budget market. Best Buy already sells the handset.

And AT&T has started selling refurbished versions of the iPhone 3G for $50 less than new models - $150 for the 8Gb model and $250 for the 16Gb. AT&T says the phones are those that were returned during the 30-day trial period. A two-year service contract is still necessary but the warranty is "90 days or more", rather than the usual one-year cover.

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