Editorial: iPhone is bad for cellphone users … if only one carrier has it

In Germany the best coverage according to the independent measurements of “connect” magazine is provided by Vodafone network. The cheapest prices are offered by E-Plus operator. Yet iPhone is exclusively sold only by T-Mobile Germany. Similarly in USA only AT&T Wireless is selling iPhone although everybody knows that in USA the best coverage is provided by Verizon Wireless and the cheapest prices are offered by T-Mobile USA. Shortly speaking: operators instead of competing on prices, coverage, transfer speeds, are focusing instead on one strategy for the success only: selling iPhone exclusively. It is bad for all cellphone users. Very bad.

Let’s take another example: Switzerland, where both Swisscom and Orange CH were offering iPhone right from the beginning. In this case such negative effect could not be observed:

… as both these carriers were offering various tariffs and customers had more choice without the need to be forced to specific operator.

Just this week it has been announced that monopoly of O2 UK on iPhone ends.

Interestingly Orange UK has signed a deal with Apple already one year ago but only high management at Orange UK knew it, not even Apple UK employees or any other staff – Orange UK was obliged to secrecy and negotiations were carried out directly with Apple headquarters in Cupertino, California. Now after several years of misery and monopoly of O2, both Orange and Vodafone are getting iPhone for UK.

Let’s face it: wireless carriers aka mobile operators deserve nothing less than being dummy pipes to the Internet. They don’t deserve better. Example: Tom Alexander is a top executive at Orange UK and he joined it in 2007. What was his main strategy since he got hired? To do everything to get iPhone for Orange UK.

However the iPhone revolution is not finished yet in UK. One could pinpoint the following stages in introduction of iPhone to given country:

— phase one: only one operator/carrier has it (examples: USA, Germany)
— phase two: more operators (but not all) get iPhone, still iPhone is sold on SIM lock (examples: UK, Switzerland)
— phase three: several operators have iPhone and it is sold without SIM lock (examples: Italy, Hong Kong)

In other words: having iPhone also on Vodafone and Orange is big change and it will mean that now O2 is very incentivized to offer other phones (examples: Palm Pre, HTC Touch HD2) but one must admit that “3” operator in many cases has the lowest prices so the iPhone revolution in UK is not in its final stage yet.

Carriers are paying to Apple $400 for each sold unit and percentage of revenues for 2 years, and with introduction of iPhone to more operators in UK, clearly Apple is a big winner in this situation. The question only remains: when will Apple stop damaging cellphone markets in countries where it is offered on exclusivity basis for only one carrier per country? In these countries iPhone is indeed a bad thing for cell phone users.

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