EU Regulators Questioning Carriers Over Apple's iPhone Contract Demands

[MacRumors]

Back in March, we reported that European Union regulators were beginning to take a look at Apple's contracts with carriers, questioning whether Apple's strict terms regarding sales commitments and other factors have amounted to anti-competitive behavior.

Financial Times now reports that the EU is ramping up its interest in Apple's policies, sending out questionnaires to the carriers in order to gather more information about their agreements with Apple.

The nine-page questionnaire sent to telecoms groups primarily relates to sales practices, including whether Apple forces groups to buy a minimum number of iPhones, restrictions on the use of marketing budgets, and clauses that ensure Apple is always offered no worse subsidies and sales terms than other smartphone makers.

It also asks whether Apple places technical or contractual restrictions on the iPhone 5 that mean it cannot be used on high-speed 4G networks in Europe.

While regulators are clearly focused on Apple's behavior, they do acknowledge that competition in the smartphone market has increased, with Samsung rapidly gaining ground and even Nokia and BlackBerry contributing viable alternatives for customers.

The carriers have until June 17 to respond to the questionnaires, and the European Commission will use the results to help it decide whether to launch a formal probe into Apple's tactics.

Article Link: EU Regulators Questioning Carriers Over Apple's iPhone Contract Demands

 

[thacube]

why wouldn't apple want the iphone 5 on high speed 4g in europe?

 

[macs4nw]

It seems not a day goes by that APPLE isn't under the microscope somewhere.
An excellent incentive to run the company squeaky-clean. What other company could stand this kind of intense scrutiny? Go

 

[genovelle]

I'm sure some anonymous concerned party (competitor) lodged a complaint. If apple requires a commitment to invest in making their popular phone compatible with a certain carrier and the carrier clearly as other options, them what have they done wrong? These same companies benefit from Apple's loyal customers and marketing. Many of the phone companies don't promote the iPhone once the get going. they push any and every other phone.

 

[diazj3]

I'm sure some anonymous concerned party (competitor) lodged a complaint.

Oh, sure! Because Apple NEVER does anything wrong to customers or clients. Any complain must be the product of a competitor's envy,and nothing else. Always.

[/s]

 

[charlituna]

why wouldn't apple want the iphone 5 on high speed 4g in europe?

of course they would want it. But if it's like the US where there are flavors of cell service they might not be supporting every single variant, which the EU could see as one of those 'technical restrictions'

 

[ArtOfWarfare]

why wouldn't apple want the iphone 5 on high speed 4g in europe?

It's an engineering tactic: make your product competitive, but leave yourself room for improvement for the next generation. It's a way of easily making repeat customers (they'll buy this year's model without feature X and next year's with feature X - even though feature X was ready in time for last year's model) and repeat (aka loyal) customers are worth a lot more than one time customers - not only will they empty their own wallet for you - they'll encourage their friends to do the same.

I'm not saying that's what Apple did here - I'm just giving it as a potential reason.

 

[Mackan]

This should be front page news instead of some home button part leak, or an analyst taking ********.

You can bet that under the surface, there's a lot of dirty tactics going on, that you as consumer should be aware of.

 

[KiwiAdventure]

It is against the law in a lot of countries to price fix and tell retailers you must sell at this price. If retailers want to sell products at below cost or even more then recommended retail price Apple cannot stop this under any means.

The one thing Apple has is all their products has good resale value.

 

[DMH3006]

I see no issues.
Of course if Apple can ensure they'll buy a minimum of devices they will,its just good business as are the clauses that they can't be offered worse subsidies than other companies.

 

[roadbloc]

It seems not a day goes by that APPLE isn't under the microscope somewhere.
An excellent incentive to run the company squeaky-clean. What other company could stand this kind of intense scrutiny? Go

When a company is on virgin territory, it is wise to keep an eye on it. Just like Microsoft throughout the 90s.

 

[NightFox]

I see no issues.
Of course if Apple can ensure they'll buy a minimum of devices they will,its just good business as are the clauses that they can't be offered worse subsidies than other companies.

Whilst it may be good business to use a position of strength (i.e. carriers can't afford not to carry the iPhone), it's also often not in the consumers' interest to allow companies to exploit this type of advantage to the extent that it can dictate and manipulate the market.

In some ways I like the fact the Apple has turned around the carrier/supplier relationship, I don't have to suffer a carrier's splash screen and bloatware on a carrier-crippled device when I use my iPhone like I always used to have to when carriers called the shots, but when it comes down to trying to gain an unfair advantage that isn't open to the competition then I think the EU is right to step in to ensure the playing field remains level and consumers don't lose out.

 

[Smartass]

It also asks whether Apple places technical or contractual restrictions on the iPhone 5 that mean it cannot be used on high-speed 4G networks in Europe.

This i've noticed that also, you cannot use LTE with my operator since apple didnt "approve it" (because they're not selling iphones). How dumb is that, year 2013 and you need an "apple approved operator" so you can have LTE on your phone?

 

[abz1981]

Well I am for one glad of this probe by the European Union only for the technical restrictions of the Iphone 5. Apple should have ensured that they enabled 800mhz band support for LTE in the Iphone 5. As 90% of European Carriers are unable to support LTE due to them having 800mhz LTE bands only.

So hopefully Apple will release some sort of update to the existing Iphone 5 in order for it to support 800mhz LTE band or if they bring out the Iphone 5S to allow some sort of trade in exchange for current Iphone 5 users to obtain Iphone 5S to support all LTE bands.

 

[Sincci]

So hopefully Apple will release some sort of update to the existing Iphone 5 in order for it to support 800mhz LTE band or if they bring out the Iphone 5S to allow some sort of trade in exchange for current Iphone 5 users to obtain Iphone 5S to support all LTE bands.

This really isn't something that Apple would ever do.. their only solution for those people who wish to have a full support for all LTE bands is to buy a new phone.

Besides, it's not enough just to have support for 800Mhz, they really need to have a support for 2600Mhz too since most of the Nordic countries have build majority of their LTE networks based on that band.

 

[abz1981]

This really isn't something that Apple would ever do.. their only solution for those people who wish to have a full support for all LTE bands is to buy a new phone.

Besides, it's not enough just to have support for 800Mhz, they really need to have a support for 2600Mhz too since most of the Nordic countries have build majority of their LTE networks based on that band.

In that case they should support all LTE bands. I do not see why a new phone should have to be purchased. Yes it may be an idea of getting more customers and making money. however there should be some sort of loyalty option for existing customers. Dont get me wrong, I am not apple bashing or anything. I love my apple products. But this situation with the Ip5 gets me annoyed.

 

[majkom]

Apple tried to take some power from telcos... and almost succeeded, unfortunately android gave that power back to those evil companies.. so for me, whatever apple does to weaken telcos, I am in.. go !

 

[BBCWatcher]

...whether Apple forces groups to buy a minimum number of iPhones, restrictions on the use of marketing budgets, and clauses that ensure Apple is always offered no worse subsidies and sales terms than other smartphone makers.

None of these sales practices are anticompetitive legally speaking and in the abstract. Absolute minimum quantity sales commitments are generally OK as long as they're not tied to percentages of a carrier's overall sales volumes, for example. If Apple funds marketing then Apple should have the right to set reasonable rules for how those funds are used -- but Apple cannot dictate how other marketing funds are used (except to prohibit outright disparagement), nor can Apple tie a carrier's marketing funds to a percentage of the carrier's overall marketing budget, for example. "Most favored pricing" contracts are generally OK too as long as the carrier is free to strike identical "most favored" contracts with other equipment manufacturers.

The EU needs to be careful not to confuse a strong negotiator able to secure highly favorable contract terms due to its strong products with an anticompetitive negotiator that is doing something illegal. Generally speaking Apple knows exactly where the line is between aggressive negotiation and illegal anticompetitive behavior. Also, the EU needs to be careful not to protect incumbent carrier cartels. The EU governments granted the carriers wireless spectrum franchises which are limited in supply. There are no comparable barriers to entry among smartphone manufacturers. Apple may have succeeded in shifting profits from carriers to Apple, but to the extent that's happened the shift has only accrued to the benefit of consumers who can choose among a wide variety of Apple and non-Apple smartphones to use on networks that charge much lower rates for voice and data services. In other words, Apple may have helped tame the carrier cartels which then increased the overall market and boosted the fortunes of Apple's competitors (including Samsung and Google) over those same carriers that can no longer charge as much for more open networks. It would be ironic and sad if the EU penalized Apple for what seems to be a pro-consumer accomplishment.

 

[booksacool1]

Apple tried to take some power from telcos... and almost succeeded, unfortunately android gave that power back to those evil companies.. so for me, whatever apple does to weaken telcos, I am in.. go !

What? Apple was the company which allowed carriers to disable hotspot, 3G facetime and large apps over 3G.

Carriers might not be able to brand iOS but Apple has certainly made concessions.

 

[CaTOAGU]

I'm really not sure I see the problem here. It's not like the operators are helpless children. The only reason Apple manages to negotiate such favourable terms is because the iPhone is so popular. If it was less popular the operators would have a stronger negotiating position.

It's also these operators that, back in the day, would introduce restrictions of their own on handsets. Turning off features they didn't like and installing their own bloatware on top of or instead of the manufactures own O/S.

As far as I'm concerned the operators should be as close to dumb pipes as possible. Of course they have to do compatibility testing to make sure handsets don't cripple their network but that should be as far as they go.

What's happening with Apple is just a redressing of the balance of power away from the operators, they don't like it, I don't blame them but it's how it should be in my opinion.

 

[IGregory]

It seems not a day goes by that APPLE isn't under the microscope somewhere.
An excellent incentive to run the company squeaky-clean. What other company could stand this kind of intense scrutiny? Go

Right or wrong Apple does stifle competition with its patent and licensing enforcement. When one is perceived as a bully one makes him/itself a target. That's the downside of being at the top of the heap. Arrows generally are aim upward.

 

[jagolden]

EU - shorthand for anti-business, socialist gangsters. Pathetic.

 

[Bubba Satori]

Apple should just buy the EU.

 

[NoNothing]

why wouldn't apple want the iphone 5 on high speed 4g in europe?

As reported on The Verge, Apple won't allow the iPhone to connect to a 4G network until after Apple has tested the phone on the carriers specific network. My guess this complaint is being filed by a carrier that does not offer the iphone, is loosing customers to competitors and like the terms offered by Apple.

 

[sofila]

Apple has nothing to worry about

as long as is clean and clear