iPhone a no-show at Apple Expo (and now we know why)

[AppleInsider]

The Apple Expo -- Europe's largest Apple and Mac tradeshow -- kicked off in Paris this week to little fanfare. Not helping matters was the conspicuous absence of iPhone, which had been widely expected to make its French debut at the conference. So it doesn't take a genius to figure out that something went awry.

For the past three days, that something has been the subject of considerable debate, especially considering that a spokesperson for France Telecom told Dow Jones last Thursday that company had definitively "signed an agreement with Apple to sell the iPhone."

In addition, other stars seemed to be aligning at precisely the right time -- Apple chief executive Steve Jobs had planned a lengthy trip to Europe and in the days leading up to the Paris expo had ushered the iPhone into both the UK an Germany during separate press conferences in those respective regions.

So what happened? According to a report posted to the Challenges website Thursday, France Telecom -- which umbrellas the Orange brand -- and Apple are struggling to come to an agreement on the distribution of the handset in France.

Without citing sources, the French weekly said Apple and the French carrier are also at odds over the percentage of service revenues the telecom operator had to give to Apple as part of the distribution deal (reportedly 10 percent). Should the two parties fail to reach an agreement quickly, the launch of the iPhone in France ahead of the crucial Christmas season could be jeopardized, the report added.

This has left more than a few onlookers scratching their heads. Did France Telecom jump the gun before the ink on its contract with Apple had time to dry? Was its statement last Thursday a miscommunication between corporate and media relations? Or did the carrier pull an abrupt 180 and elect to bow out of a just-signed agreement within a certain grace period?

Those questions still seek answers.

[ View this article at AppleInsider.com ]

[CREB]

Free the French iPhone users!

[jont-uk]

Or is it something to do with French law that says a mobile phone *must* be unlocked after 6 months if a customer requests ... how will Apple square that one ?

Jon

[bluedalmatian]

I suspect its Orange being awkward which they seem to be renowned for, never heard anyone with a good word to say about them and ive said all along Apple should steer well clear

[JakeTheRock]

Originally Posted by jont-uk

Or is it something to do with French law that says a mobile phone *must* be unlocked after 6 months if a customer requests ... how will Apple square that one ?

Would this necissarily apply though? Since the phone is a US phone made by a US company...
I'm not a law student though, so I'll admit that I don't know laws real well.

[Squirrel_Monkey]

Originally Posted by JakeTheRock

Would this necissarily apply though? Since the phone is a US phone made by a US company...
I'm not a law student though, so I'll admit that I don't know laws real well.

Without any understanding of French law, all we can do is compare Apple to Orange.

[SpamSandwich]

Originally Posted by Squirrel_Monkey

Without any understanding of French law, all we can do is compare Apple to Orange.

heh, heh

[Johnny Mozzarella]

Originally Posted by JakeTheRock

Would this necissarily apply though? Since the phone is a US phone made by a US company...
I'm not a law student though, so I'll admit that I don't know laws real well.

IANAL, but my understanding is if you are a U.S. citizen, you can steal and murder while visiting France because the laws don't apply to you.

[mark2005]

There was a rumor (was it MacScoop?) that had announcements on Tue in UK, Wed in Germany, and Thu in France. The first two parts came true but not the third.

This reminds me of the Apple-Cisco agreement on the iPhone name that happened and didn't happen just before MacWorld SF. So it's also possible that Apple balked at whatever changes Orange made to the version of the agreement that Orange signed and submitted back to Apple.

Well, now we'll see who blinks first. Or if Apple will go dating again and marry someone else in France.

[mark2005]

Originally Posted by Johnny Mozzarella

IANAL, but my understanding is if you are a U.S. citizen, you can steal and murder while visiting France because the laws don't apply to you.

Yes, you can do that in France because they'll just want to have a nice diplomatic talk about it after, but better not do that in Singapore...

[cutemartin]

Originally Posted by jont-uk

Or is it something to do with French law that says a mobile phone *must* be unlocked after 6 months if a customer requests ... how will Apple square that one ?

Jon

This wouldn't cause a last minute (seemingly) change of plans, though. Apple will have known the conditions for selling in each country from the start.

It doesn't surprise me that the iPhone is not on display at the Apple Expo, just as it's not on display at the Apple Store in Regent Street yet. They want to boost the attendance on release day.

Knowing Apple, it could just be that steve was pissed off with Orange for blabbing to the media and stealing his thunder, so he's making them sweat a bit and look foolish...

[mdcat]

Originally Posted by jont-uk

Or is it something to do with French law that says a mobile phone *must* be unlocked after 6 months if a customer requests ... how will Apple square that one ?

Jon

As anyone at Microsoft will tell you US computer companies doing business in Europe have to comply with EU law.

I'm also not a law student or lawyer, just an educated consumer

[city]

Removed

[Electric Monk]

It depends. If happen to be a diplomat, you're pretty good if you want to hold a murder spree.

Or just amass tens of thousands of dollars in unpaid parking tickets.

[palegolas]

It's not like with the DRM where the labels want control.. No, this time it's just Apple that wants to set the rules and control as much as they can. I don't like it. I hope the iPhone gets unlocked by law sooner rather than later.

[mdriftmeyer]

Originally Posted by jont-uk

Or is it something to do with French law that says a mobile phone *must* be unlocked after 6 months if a customer requests ... how will Apple square that one ?

Jon

Try this:

Apple does not care whether or not France's law requiring unlocking the phone, upon consumer request, happens or not. You buy the phone as an end user and you pay Apple for that phone.

If you hack that phone you void the warranty: No technical support if the phone fails, including battery replacement. This would be true whether or not the phone could be used with any Telco.

France knows if it wants the innate branding of the iPhone it has to fork up 10%. If that person leaves in 6 months that 10% for 6 months isn't a long time to generate additional sources of income to compensate for Apple's service provider tax.

Apple doesn't care. Apple doesn't have to care and nor should they care.

If Apple had their druthers they would prefer that the phone work for all carriers with a 10% service tax.

I'm sure Apple would exchange that tax for a larger piece of the Video/Audio service that I imagine Apple has to pay when folks aren't near a WiFi Hotspot and use the telco to download a mp3 file.

Don't be surprised if telcos have been trying to squash the WiFi in hopes people would be stupid enough to waste minutes on downloading Audio/Video files.

Bottomline: Telcos don't want to lose any profit margins they currently get, but they are reaching a saturation level. The iPhone creates a new market whether you agree with it or not.

What would really change the landscape is if and when Google lights their Telco service and opens it up to all phone providers where the consumer would decide which is the most popular product by virtues of phone sales.

I'd imagine Phone providers would be willing to help provide funds for this network if they know they won't be controlled by a dictator and have their product crippled.

Let France change their mind. Let the rest of the EU providers pay and watch France turn an about face on it.

They only provide the Network. They don't provide the end product.

[solipsism]

Originally Posted by palegolas

It's not like with the DRM where the labels want control.. No, this time it's just Apple that wants to set the rules and control as much as they can. I don't like it. I hope the iPhone gets unlocked by law sooner rather than later.

Either way Apple wins. They can either sell the iPhone for $400 and get monthly dues from select carriers or sell it unlocked for more money if it occurred right away. By the time anything like that would occur the R&D and marketing costs would be more than accounted for, there would be millions of people with 24 month (or 18 in the UK) paying Apple indirectly for the use of the iPhone and it will then be open to more customers.

But the law on this could take as long as AT&T and Apple's contract. So it's not a quick fix to your unlocking or hacking desires. Apple does has a case here regarding using select carrier lock-ins. One, other device manufacturers do it. Two, Apple is providing services that can only be achieved when working with select partners.

[SpinDrift]

Who cares about France anyway?

[ZO]

Originally Posted by SpinDrift

Who cares about France anyway?

Flamebait 'tard

[Eriamjh]

Originally Posted by jont-uk

Or is it something to do with French law that says a mobile phone *must* be unlocked after 6 months if a customer requests ... how will Apple square that one ?

Jon

How about this: The French iPhone will come with a non-removable SIM card?

[wnurse]

Originally Posted by cutemartin

This wouldn't cause a last minute (seemingly) change of plans, though. Apple will have known the conditions for selling in each country from the start.

It doesn't surprise me that the iPhone is not on display at the Apple Expo, just as it's not on display at the Apple Store in Regent Street yet. They want to boost the attendance on release day.

Knowing Apple, it could just be that steve was pissed off with Orange for blabbing to the media and stealing his thunder, so he's making them sweat a bit and look foolish...

That would be childish. If apple signed an agreement with a company, that company has a right to announce the deal. It's not like they are a supplier to apple. It would be like a company getting walmart to agree to carry their products but pulling it off the shelves after walmart announces they will start carrying the products. At the end of the day, apple makes no money if they do not sell the iphone. I'm sure france telecom is still selling phones, with or without the iphone.

[smokeonit]

besides the UK there has been no info on pricing in europe...

germany it's just the info that it will be for sale on nov. 9th... nothing more, no word on plans or the price for the iphone itself...

so orange is not so different from t-mobile in germany... they just didn't announce a date for when the iphone will go on sale in france....

what really sucks is that the iphone will ONLY be sold by t-mobile germany. not by apples german online store or authorized resellers... which makes it impossible to buy an iphone in germany without a service contract, monthly or pre-paid... i think orange france might have gotten the same deal... for a european that wants to buy an iphone an unlock it there's only the choices of getting one from the US or from the UK... otherwise your screwed!!!

there's already rumors that smart entreprneurs are buying iphones in the US in large quantities in order to be able to supply demand in germany and france for people that want to go the unlocked way and choose their own provider....

the only downside for germany is that t-mobile germany is the only provider with EDGE... and i think that orange france is in the same position... which leaves the german and french unlocked iphone owner with super slow GPRS if they want to go online when there's no wifi around... GPRS=56kbit, EDGE=200kbit, and no visual voicemail of course...

in the US and the UK there's EDGE coverage if you go to the comeptition, which in both cases happens to be t-mobile. coincidence???

and in the UK t-mobile has MUCH better EDGE coverage than o2 UK... MUCH better EDGE coverage.

in the US the coverage should be about the same...

i don't get it why apple hasn't chosen t-mobile as primary partner and only go with another partner if t-mobile is not available like in france...

they could have squeezed better roaming agreements out of t-mobile... and i think there could have been some other perks like selling ipod @ those locations... t-mobile has a lot of stores... on top apple should have tried to get t-mobile to commit to iTS in order to get more sales in europe... in music sales iTS is not as good as it is in the US....

[cnocbui]

Originally Posted by SpinDrift

Who cares about France anyway?

Who cares about the iPhone, more to the point?

[cnocbui]

Originally Posted by smokeonit

i don't get it why apple hasn't chosen t-mobile as primary partner and only go with another partner if t-mobile is not available like in france...

Divide and rule, old boy, divide and rule!

[smokeonit]

Originally Posted by cnocbui

Divide and rule, old boy, divide and rule!

if the consumer benefits, yes... but otherwise, no....

in this case i think the divide strategy is counterproductive...

[lfmorrison]

Originally Posted by mdriftmeyer

France knows if it wants the innate branding of the iPhone it has to fork up 10%. If that person leaves in 6 months that 10% for 6 months isn't a long time to generate additional sources of income to compensate for Apple's service provider tax.

What? By "France" I assume you're referring to the private corporation that owns the "Orange" network.

Apple doesn't care. Apple doesn't have to care and nor should they care.

Sure they should! If every iPhone buyer is forced to stick with Orange for 2 years, that would be 24 months during which time Apple gets a cut of the service fees paid by the clients.

If the iPhone buyers are free to unlock at will, that will mean that Apple's 24-month cut off the top per-unit gets reduced to 6 months per unit.

Let's use some real numbers. In the US, the cheapest plan you can subscribe with when you buy an iPhone is $59.99 per month. If we use your suggested cut, 10%, then Apple would be getting $6 per month from every iPhone user. That's $144 per user over the life of the 2-year contract. With over 1 million iPhone purchases in the US so far, that would be $144 million in additional revenue over 2 years for Apple, just from the iPhones purchased since September.

If you reduce the locked-in term from 2 years to 6 months, then that guaranteed revenue drops to $36 million. The potential to lose exclusive access to that additional $108 million would probably catch Apple's attention.

If Apple had their druthers they would prefer that the phone work for all carriers with a 10% service tax.

Sure. Fortunately, they don't have the power to make that happen unilaterally. They'd have to negotiate terms with each and every GSM carrier around the whole world individually.

Let France change their mind. Let the rest of the EU providers pay and watch France turn an about face on it.

So far, we have one exclusive telco provider in each EU country. Many other EU countries have similar policies in place regarding statutory unlocking - so the same issues will eventually pop up there as well.

I'm certain Apple knows it's in its best interests to keep the iPhone locked in to the exclusive carriers as long as possible, because that's the only way to guarantee their ongoing revenue stream from the generated service fees.

I'm equally certain that Apple is aware that eventually they're going to have to give up that guaranteed ongoing income stream - otherwise they wouldn't have introduced the iPhone in the UK or Germany, which IIRC, also have statutory unlocking regulations (perhaps those countries allow for a longer exclusive period than France's apparent 6 months...?). But Apple knows it's in their best interests to milk it for as long as they can.

[murphyweb]

Originally Posted by mdriftmeyer

Try this:

Apple does not care whether or not France's law requiring unlocking the phone, upon consumer request, happens or not. You buy the phone as an end user and you pay Apple for that phone.

If you hack that phone you void the warranty: No technical support if the phone fails, including battery replacement. This would be true whether or not the phone could be used with any Telco.

France knows if it wants the innate branding of the iPhone it has to fork up 10%. If that person leaves in 6 months that 10% for 6 months isn't a long time to generate additional sources of income to compensate for Apple's service provider tax.

Apple doesn't care. Apple doesn't have to care and nor should they care.

If Apple had their druthers they would prefer that the phone work for all carriers with a 10% service tax.

I'm sure Apple would exchange that tax for a larger piece of the Video/Audio service that I imagine Apple has to pay when folks aren't near a WiFi Hotspot and use the telco to download a mp3 file.

Don't be surprised if telcos have been trying to squash the WiFi in hopes people would be stupid enough to waste minutes on downloading Audio/Video files.

Bottomline: Telcos don't want to lose any profit margins they currently get, but they are reaching a saturation level. The iPhone creates a new market whether you agree with it or not.

What would really change the landscape is if and when Google lights their Telco service and opens it up to all phone providers where the consumer would decide which is the most popular product by virtues of phone sales.

I'd imagine Phone providers would be willing to help provide funds for this network if they know they won't be controlled by a dictator and have their product crippled.

Let France change their mind. Let the rest of the EU providers pay and watch France turn an about face on it.

They only provide the Network. They don't provide the end product.

So this is a very very long post from an ignorant moron who seems to know nothing about the subject he decided to comment on!!

So lets get the most important thing straight - it is not French law that a phone must be unlocked at customer request - it is EU law, that covers the whole of Europe including the UK.

Contrary to other comments on this board the EU directive in questions does not cover people unlocking their phones themselves it states that manufacturers or networks must unlock the phones if requested by the customer, it does not matter a bean where the manufacturer is based, if you sell a phone in Europe it MUST be unlockable.

"They only provide the Network. They don't provide the end product."

This of course is total rubbish, network operators in Europe supply 98% of the phones too.

Bottomline: Telcos don't want to lose any profit margins they currently get, but they are reaching a saturation level. The iPhone creates a new market whether you agree with it or not.

What? You do not have a clue about this!! the Telcos do not need the iPhone because it does not give them what they need and does not give their customers what they want. Orange is the largest network operator in the UK, Vodafone is the second. Which one of these networks have the iPhone in the UK? None of them is the answer, no, only o2 who are desperate for customers they will agree to anything.

The mobile phone market has not reached saturation point in Europe, sure everyone has a phone but the market is just getting hot. People get a new phone every 12 months in Europe, the repeat business is fantastic, the data capability that 3G brings is superb for the carriers ability to make money. (sorry iphone fans - 3G is a fast mobile data technology, a much better mobile date technology than wifi and often a much faster connection to the internet as it does not rely on the sometimes small broadband connection that many hotspots use)

Next time you think you are qualified to post a comment on something you have no knowledge about please think twice!!

[Abster2core]

Originally Posted by murphyweb

So lets get the most important thing straight - it is not French law that a phone must be unlocked at customer request - it is EU law, that covers the whole of Europe including the UK.

I would appreciate it if you could provide the refererence source, i.e., to the EU Law? My international legal firm can't seem to find it.

Thank you in advance.

[JustBrady]

So, let me get this straight, the French are being difficult? Sounds familiar...

[JustBrady]

Come to think of it, no, the french are never difficult. (Anyone sense the sarcasm?)

[Bastxxx]

The difficult in France is not only that the customer must have the possibility to unlock his phone six month later. Only France has a law which prohibites the "bound" sale to protect the customer.

The Code of the consumption forbidden the "bound and forced sale". It means, that it is forbidden for Orange to sell the iPhone with its only subscription. Orange is going to have to propose the "bare telephone" (without subscription), so that the customer can choose himself his operator.

In other words, this means that a society cannot oblige you to contract a second purchase to be able to enjoy the main purchase. It gives the customer the freedom to enjoy his purchase as he wants.

And Apple has forbidden the possibility for the operators to subsidize the iPhone which has to stay a "premium product". And if Orange proposes the iPhone without subscription and the iPhone with subscription at the same price in its stores, many customers will buy the iPhone without it, which means 0€ for Orange and Apple...So Apple would to

Apple would have decided to increase the commission (of 30 % before) to be able to mitigate the loss of income. And, logical, Orange does not agree to put back a so important sum.

Apple is a great society, but sometimes they go too far... Orange just want the right to earn money respecting the french laws.