German MVNO to undercut T-Mobile with 600 euro iPhone rebate

[AppleInsider]

German mobile virtual network operator (MVNO) Debitel said Tuesday it plans to offer a 600 euro ($891) rebate to customers who buy an iPhone from T-Mobile Germany but agree to use its wireless service instead, undermining much of T-Mobile's competitive advantage.

Reuters reports that Debitel -- which resells airtime it buys from T-Mobile and rivals Vodafone, O2, and E-Plus in Germany -- said it has no qualms about paying the difference in price between an unlocked iPhone and one locked to T-Mobile's network if it means gaining new subscribers.

Although T-Mobile had landed an exclusive deal with Apple to sell the iPhone in Germany, it was ordered by a Hamburg court last week to offer customers an option to buy an unlocked version of the handset that would not require a formal two-year contract and could be used other wireless networks in the country.

T-Mobile and Apple agreed to comply, but did so by pricing the unlocked iPhone at a whopping 999 euros in order to deter consumers from forgoing a T-Mobile contract. The two firms charge less than half that -- 399 euros -- for an iPhone tethered to the T-Mobile network.

In a statement, Debitel said it would begin offering through its stores on Wednesday iPhone contracts starting at 40 euros per month for 200 minutes, which is cheaper than T-Mobile's baseline plan of 49 euros for half as many minutes.

"We are happy to offer iPhone buyers the freedom of choice that customers are entitled to expect from a service provider," said Oliver Steil, Debitel's marketing chief.

Debitel added that customers using Vodafone, E-Plus and O2 networks would get all of Apple's iPhone services apart from visual voicemail which will continue to function only on T-Mobile's network.

[ View this article at AppleInsider.com ]

[Rot'nApple]

Originally Posted by AppleInsider

German mobile virtual network operator (MVNO) Debitel said Tuesday it plans to offer a 600 euro ($891) rebate to customers who buy an iPhone from T-Mobile Germany but agree to use its wireless service instead, undermining much of T-Mobile's competitive advantage.

Reuters reports that Debitel -- which resells airtime it buys from T-Mobile and rivals Vodafone, O2, and E-Plus in Germany -- said it has no qualms about paying the difference in price between an unlocked iPhone and one locked to T-Mobile's network if it means gaining new subscribers.

Although T-Mobile had landed an exclusive deal with Apple to sell the iPhone in Germany, it was ordered by a Hamburg court last week to offer customers an option to buy an unlocked version of the handset that would not require a formal two-year contract and could be used other wireless networks in the country.

T-Mobile and Apple agreed to comply, but did so by pricing the unlocked iPhone at a whopping 999 euros in order to deter consumers from forgoing a T-Mobile contract. The two firms charge less than half that -- 399 euros -- for an iPhone tethered to the T-Mobile network.

In a statement, Debitel said it would begin offering through its stores on Wednesday iPhone contracts starting at 40 euros per month for 200 minutes, which is cheaper than T-Mobile's baseline plan of 49 euros for half as many minutes.

"We are happy to offer iPhone buyers the freedom of choice that customers are entitled to expect from a service provider," said Oliver Steil, Debitel's marketing chief.

Debitel added that customers using Vodafone, E-Plus and O2 networks would get all of Apple's iPhone services apart from visual voicemail which will continue to function only on T-Mobile's network.

[ View this article at AppleInsider.com ]

[ Digg this story ]

Hmmm, first post maybe...

40 Euros for 200 minutes beating T-Mobiles 49 Euros for half the minutes, all for gaining a new subscriber by paying $891.00 US Dollars to get them in the first place - sounds like a winner - what kind of commitment do these new subscribers need to make so
Debitel can recoup their money? What about other services data, visual voicemail, etc.?

Sound Business Plan on Debitel's behalf!

Wonder if T-Mobile will match rebate or sue for loss of revunue?

[solipsism]

Originally Posted by Rot'nApple

Hmmm, first post maybe...

40 Euros for 200 minutes beating T-Mobiles 49 Euros for half the minutes, all for gaining a new subscriber by paying $891.00 US Dollars to get them in the first place - sounds like a winner - what kind of commitment do these new subscribers need to make so
Debitel can recoup their money? What about other services data, visual voicemail, etc.?

Sound Business Plan on Debitel's behalf!

Wonder if T-Mobile will match rebate or sue for loss of revunue?

600 / 40 = 15

That means that Debitel isn't making anything until after 15 months if no additional services are had. And Apple really makes out as they are now getting paid upfront for the iPhone and at an inflated rate.

[cameronj]

Originally Posted by Rot'nApple

Hmmm, first post maybe...

40 Euros for 200 minutes beating T-Mobiles 49 Euros for half the minutes, all for gaining a new subscriber by paying $891.00 US Dollars to get them in the first place - sounds like a winner - what kind of commitment do these new subscribers need to make so
Debitel can recoup their money? What about other services data, visual voicemail, etc.?

Sound Business Plan on Debitel's behalf!

Wonder if T-Mobile will match rebate or sue for loss of revunue?

Commitment! Ha!

Seriously though, this is the reason why you let the free market take care of these problems instead of the idiot governments. Everyone wins. T-Mobile gets their cash, Apple gets whatever percentage of that 999 euro that was coming to it. Debitel gets a new customer (who will almost surely be a money loser for them). It's a perfect solution that no one should complain about.

See how that differs from the other solutions out so far?

[Bageljoey]

Originally Posted by AppleInsider

Debitel added that customers using Vodafone, E-Plus and O2 networks would get all of Apple's iPhone services apart from visual voicemail which will continue to function only on T-Mobile's network.

Is visual voicemail something that the other carriers could implement on their own (if there were enough iPhone users in their network to make it worthwhile)? Or is it something they would have to work with Apple to provide?

I assume that Apple has patent protection on phones with visual voicemail, but I don't know if that would extend to the wireless providers technology...

[BRussell]

Originally Posted by cameronj

Commitment! Ha!

Seriously though, this is the reason why you let the free market take care of these problems instead of the idiot governments. Everyone wins. T-Mobile gets their cash, Apple gets whatever percentage of that 999 euro that was coming to it. Debitel gets a new customer (who will almost surely be a money loser for them). It's a perfect solution that no one should complain about.

See how that differs from the other solutions out so far?

Yeah, except that it was idiot government intervention that even allowed this to happen. Without it, we would have been stuck with t-mobile only. It seems to me this is a case of the government ensuring a free market.

[jpferreira]

Originally Posted by BRussell

Yeah, except that it was idiot government intervention that even allowed this to happen. Without it, we would have been stuck with t-mobile only. It seems to me this is a case of the government ensuring a free market.

exactly

and Debitel is probably just investing in free publicity by the press... how many of you guys even knew they existed in the first place?

[solipsism]

Originally Posted by jpferreira

exactly

and Debitel is probably just investing in free publicity by the press... how many of you guys even knew they existed in the first place?

The Question to ask is: How many more Germans now know about Debitel?

[noirdesir]

Originally Posted by jpferreira

exactly

and Debitel is probably just investing in free publicity by the press... how many of you guys even knew they existed in the first place?

If I had to name a virtual provider in Germany, I could only come up with Debitel (even before today). They might not be the biggest (I really don't know) but they have been one of the first and have been around since the beginning of GSM.

[jpferreira]

Originally Posted by noirdesir

If I had to name a virtual provider in Germany, I could only come up with Debitel (even before today). They might not be the biggest (I really don't know) but they have been one of the first and have been around since the beginning of GSM.

well, how's their market? how many subscribers? what are their present goals and future plans?

and: how's the competition between a virtual provider and a regular(?) one? because they might use this kind of free publicity and great offerings (iphone rebate) to compensate for a lack of confidence in their network/service and/or a lack of better services in comparison with other competitors..

i dunno, i'm just throwing some ideas here to see if we get what this apparently incredible offer from Debitel is really about...

[schmidm77]

Originally Posted by BRussell

Yeah, except that it was idiot government intervention that even allowed this to happen. Without it, we would have been stuck with t-mobile only. It seems to me this is a case of the government ensuring a free market.

The iPhone is not a market, it is a single device in a market. The actual German cell market has multiple service providers which offer dozens of choices of devices, and consumers are free to choose amongst any available combination offered.

So please explain to me what this whining about exclusive service providers for a particular device has anything to do with the freedom of the market at large. A free market simply implies that buyers and sellers are free to trade goods, services and money through consensual agreement without force or coercion. Nobody is forcing Germans to buy an iPhone, but apparently they want to be able to force Apple to sell them one on their terms, and theirs alone. Fine, it's your country, you can do what you like. But don't misrepresent your intentions as being some noble protection of the "free market."

[SpamSandwich]

Interesting tactic on Debitel's part. Good move.

[freelander51]

Originally Posted by AppleInsider

"We are happy to offer iPhone buyers the freedom of choice that customers are entitled to expect from a service provider," said Oliver Steil, Debitel's marketing chief.

Just that only T-Mobile offers EDGE with a near national cover in Germany. W/o EDGE i rather get a iPod Touch or loose the will to live.

Great stunt though.

[Ireland]

Haha!!

[noirdesir]

Originally Posted by freelander51

Just that only T-Mobile offers EDGE with a near national cover in Germany. W/o EDGE i rather get a iPod Touch or loose the will to live.

Great stunt though.

I am curious to see the details but as a virtual provider Debitel can in principle offer access to T-Mobile's EDGE network.

[mdriftmeyer]

As ususal, there is no official statement from Apple that they are charging the markup that T-Mobile levied on the iPhone in allowing it to be unlocked.

There is no official statement from Apple about Debitel.

We know that T-Mobile got the exclusive contract in Germany from Apple.

We know that Debitel is willing to absorb that mark up to take market share from T-Mobile.

What we assume is that original mark up went to Apple's bottom line.

Apple had a contract for a specific set of circumstances with T-Mobile.

T-Mobile has an injunction against it to release these phones as unlocked.

T-Mobile knows the German law and after some research reached an unlocked tax to detour people from leaving T-Mobile.

People proclaim Apple is raking in the money.

Apple is making no more money than what they were making on the hardware from the original contract.

The freedom tax T-Mobile levies on the device goes into T-Mobile's pockets as "lost long-term capital, amortized over the normal use terms of an initial contract, plus some extra fees", yet we keep reading about Apple making huge dividends on this law.

They are only selling it exclusively through T-Mobile.

If T-Mobile wants to be the broker between Apple and the German populace while enacting a large commission then T-Mobile knows it will have to increase the tax even more if it ever wants to grow it's user base with the iPhone as it's bait.

Debitel can only do this cost lost for so long.

Meanwhile, the courts will have to finally decide on this for Germany.

Either way, Apple may not be making the sort of ROI that AT&T does for them because of US Laws not requiring unlocked phones, but they still make a decent margin for every phone sold and it gets OS X into the hands of more people who most likely have never used it until they bought this phone.

Apple Wins over the mind share and grows it's install base with new customers purchasing their computers to work with these iPhones.

The iPod Touch will only add to the bottom line installed base.

If Apple can come out with a few more "must have" products in the consumer electronics space with OS X running the system it will have a gravitational effect on future computer sales to even more consumers.

[dreyfus2]

Originally Posted by jpferreira

exactly

and Debitel is probably just investing in free publicity by the press... how many of you guys even knew they existed in the first place?

Well, actually debitel has 13 million customers in Germany and is the biggest player. The move does make sense - because people can now combine all T-Mobile tariff options freely (e.g. lot of talk time and little data, even domestic flatrates for people talking a lot), something T-Mobile itself does not allow.

[Joe_the_dragon]

Originally Posted by Bageljoey

Is visual voicemail something that the other carriers could implement on their own (if there were enough iPhone users in their network to make it worthwhile)? Or is it something they would have to work with Apple to provide?

I assume that Apple has patent protection on phones with visual voicemail, but I don't know if that would extend to the wireless providers technology...

How long before other phones get visual voicemail?

[anantksundaram]

Originally Posted by Joe_the_dragon

How long before other phones get visual voicemail?

My reaction is "who cares." Now that I have been using VVM, it seems like such an obvious and simple feature that it makes you wonder, "how come no one else thought of something similar before?" Apple did.

That's a long-winded way of saying that Apple will be on to something else by the time that these mobile phone providers get to some type of VVM knockoff.

[Shogun]

Originally Posted by solipsism

600 / 40 = 15

That means that Debitel isn't making anything until after 15 months if no additional services are had. And Apple really makes out as they are now getting paid upfront for the iPhone and at an inflated rate.

If Debitel does not hand out cash to people, but offers the 600 euros in credit then wouldn't they make out well before 15 months since the money you're saving is different than the money it is costing them? Or maybe they don't come out even until after 15 months...

Say that to provide you the service it costs them 15 euros a month and they charge 40. Giving you a 600 euro credit only actually costs them 225 euros, but that's what it costs over the 15 months. So it's another few months -- in this case 225/40 or 6 more months to begin making a profit on you.

Then again, as others have said, they can probably get more out of folks for such things as:
- More minutes
- More data
- More SMS Texts.

In the above example they make 135 euros on you over two years. Probably not bad considering that they get some mindshare and that 135 would be the minimum -- well more if cost per month is less than 15, and well more again if people pay for more services beyond the 40 euro plan.

[dreyfus2]

Originally Posted by noirdesir

I am curious to see the details but as a virtual provider Debitel can in principle offer access to T-Mobile's EDGE network.

Not only in principle - they DO offer access to the EDGE network. My T-Mobile contract is from debitel and I use EDGE all the time.

[dreyfus2]

Originally Posted by Shogun

Then again, as others have said, they can probably get more out of folks for such things as:
- More minutes
- More data
- More SMS Texts.

Exactly! Everybody wants these customers - interested in the newest gadgets, ample money to spend, actually using data services. This should be the first mobile to receive 600 EUR in subsidies in history, and it further proofs that Apple's approach was wrong (for Europe). Instead of dealing with law suits, bad press and upset fans - if they would have allowed the market to fix the conditions, they would sell more, not less and they would get all the money at once - not over 24 months. They could get even more, if they sell and service it themselves - Apple is cool, Apple is a selling point, people want to be Apple customers, not T-Mobile customers.

Just to add to your above points: debitel is also reselling regular phone lines and DSL tariffs, every new customer in the mailing list is money, in this case: big money.

[aegisdesign]

Originally Posted by anantksundaram

My reaction is "who cares." Now that I have been using VVM, it seems like such an obvious and simple feature that it makes you wonder, "how come no one else thought of something similar before?" Apple did.

That's a long-winded way of saying that Apple will be on to something else by the time that these mobile phone providers get to some type of VVM knockoff.

Someone at a carrier here in the UK I know (not O2) described the tech behind VVM as being a modified IMAP mail server. Each voice message is stored as you would an email on a server. You place a VVM server on the internet and the iPhone connects to it over wifi/gprs/edge and downloads it as it would email.

That sounds perfectly simple to implement. Whether the protocol actually IS IMAP or not I don't know, but it wouldn't be that much of a stretch to do. IMAP IDLE could even do PUSH Voicemail.

[aegisdesign]

Originally Posted by dreyfus2

This should be the first mobile to receive 600 EUR in subsidies in history, and it further proofs that Apple's approach was wrong (for Europe).

I'm pretty sure it's not. The N95 (as we always use as an example) cost way over €600 unlocked when it first came out and it's available free on tariffs similar to the iPhone.

[dreyfus2]

Originally Posted by aegisdesign

I'm pretty sure it's not. The N95 (as we always use as an example) cost way over €600 unlocked when it first came out and it's available free on tariffs similar to the iPhone.

When it (the N95) first came out, no carrier was offering it subsidised (most did not offer it at all). In the meantime they do offer it, but the average street price is down to 460 EUR. At a street price of 460 EUR T-Mobile is offering it for 229.95 EUR with a 24 month contract - so, the subsidy is 230 EUR, not 600.

[aegisdesign]

Originally Posted by dreyfus2

When it (the N95) first came out, no carrier was offering it subsidised (most did not offer it at all). In the meantime they do offer it, but the average street price is down to 460 EUR. At a street price of 460 EUR T-Mobile is offering it for 229.95 EUR with a 24 month contract - so, the subsidy is 230 EUR, not 600.

Ok, let's pick a current deal...

N95 8GB Unlocked at Expansys... £569.95 or about €795

http://www.expansys.com/p.aspx?i=158600

There are plenty of deals for a completely subsidised N95 8GB. I just picked Vodafone at random.

N95 8GB with 18 month contract. 750 minutes, 500 text. Free phone. £40 a month. (£20 for first three months saving you £60). 120MB a month data on Vodafone is £7.50. You're not limited to just web and you can use it as a modem - useful. No free hotspot access - who cares. No Visual Voicemail - who cares.

Cost of iPhone on a similar O2 tariff (150 minutes talk less than Vodafone) - £1079.

Cost of N95 8GB as above - £795. Don't want data - £660. Don't want a contract - £480 (if you ask nice and buy a £20 PAYG credit). Ie. less than half the price of an iPhone and no commitments. Stick it on eBay after 3 months use if you don't like it.



I could have chosen O2 and an older N95 (the non 8GB version - seems fair - it's as old as an iPhone even if it's tech is better) where it's free with a £35 a month tariff (1000 texts and 600 minutes). Add on unlimited web browsing at £7.50. That's £765 from the same carrier as opposed to £1079 with half the number of text messages.

You'd have to have a serious girlfriend problem to get through 1000 text messages I guess, so arguably Cloud access is more useful.

[dreyfus2]

Originally Posted by aegisdesign

Ok, let's pick a current deal...

...

OK, I see. Seems like subsidies in the UK are much more severe than in Germany. Even with top of the price-list models like the E90 I cannot find any deal exceeding 250 EUR in subsidies here.

Originally Posted by aegisdesign

You'd have to have a serious girlfriend problem to get through 1000 text messages I guess, so arguably Cloud access is more useful.

Please do not remind me - I had a story like that about a year ago. I still have her sausage dog. A Cloud and a harp sometimes do sound desirable

[freelander51]

Originally Posted by BRussell

Yeah, except that it was idiot government intervention that even allowed this to happen. Without it, we would have been stuck with t-mobile only. It seems to me this is a case of the government ensuring a free market.

You will find that this was NOT a government intervention but a court ruling. Unless you start to question the need of an independant judiciary system, and I as a German am proud of ours, you should be happy about it too.

You might disagree with some decisions but the fact that CAN disagree and are NOT thrown into jail or shot (Russia, China anyone ?) is called freedom and democracy.

[BRussell]

Originally Posted by freelander51

You will find that this was NOT a government intervention but a court ruling. Unless you start to question the need of an independant judiciary system, and I as a German am proud of ours, you should be happy about it too.

You might disagree with some decisions but the fact that CAN disagree and are NOT thrown into jail or shot (Russia, China anyone ?) is called freedom and democracy.

Eh, I call it a government intervention because the judge made his ruling on the basis of a law enacted by the government. Besides, the judiciary is part of the government rather than the free market that the original poster referred to.

And I don't think you understood my post. I am happy about it. I don't know how any consumer could be unhappy about it. My use of "idiot" was just copying the post I was responding to.

[freelander51]

Originally Posted by BRussell

Eh, I call it a government intervention because the judge made his ruling on the basis of a law enacted by the government. Besides, the judiciary is part of the government rather than the free market that the original poster referred to.

And I don't think you understood my post. I am happy about it. I don't know how any consumer could be unhappy about it. My use of "idiot" was just copying the post I was responding to.

OK I guess I owe you an apology in this case and I should have directed my blast at cameronj.

I do however have to stress that the judiciary is independent from any government -especially on the lower levels. That a constitutional judge will carry some form of party ticket is clear (although in most cases they leave it at the door).

But in any modern democracy the judiciary, the executive and the legislative are independent from each other. That is what makes us (western) democracies. That a judge then upholds a law passed by a democratically elected government (hence by the people) is more then obvious as well.

One may moan as much as one wants - but these things happen because we do not live in a state of anarchy.

By reading some of these posts one might think that Europe is/has no free market at all. We do - really. But we do have laws too. Laws which were passed by members of parliament, who in turn were elected by the people. And -and this has always been my bottom line- when you come to Europe you have to respect our laws as much as you expect me to respect the laws of your country when I come to them.

Hell - if I misbehave in the US or dont pay a ticket, the next time I come to the US I might be refused entry and shipped back home...you would not get this the other way round BTW....