Look Out For The iPhone Tax

Financial Times recently reported that Apple (AAPL) has signed several deals in Europe: T-Mobile Germany, Orange France, and O2 UK. Apparently, the mobile operators have agreed to fork over as much as 10% of the revenues resulting from the use of the iPhones on their networks.

Round one definitely goes to Apple in this boxing match. This is a brilliant move. Nothing is harder for mobile operators to do, than giving up a piece of their revenue per user. Not sure this is true? Take a read through any mobile operators quarterly earnings slides and see how they crow about increasing average revenue per user [ARPU].

How could this be different from the AT&T (T) roll out in the US? Though Apple shareholders (which I am not) should be ecstatic. However, Apple users in Europe will need to be satisfied with cooing over the beautiful user interface with the lack of HSDPA for Internet downloading.

Get your act together on network side, Apple! The company certainly can’t use the excuse that Euro operators do not have the HSDPA infrastructure in place. Heck, operator 3 in the UK, just lowered its HSDPA pricing to $20 per month for 2.8 Mbps. I do not think we are going to see a price like that from AT&T any time soon.

Full disclosure: No position in AT&T, Apple, 3, Orange, or 02 at time of writing.

Comments

[David Lentz:]

And exactly what would preclude Apple from adding HSDPA support to a Euro iPhone? It would seem that they're going to need to do something to prevent people in the US from purchasing European iPhones and using them with T-Mobile here in the States, undercutting AT&T in the domestic markets.

As AT&T is intent of having a lock on domestic iPhone use, a European iPhone that allows Americans to use it over T-Mobile's US networks would seem to get in the face of AT&T. Having a Euro iPhone that uses only HSDPA for cellular operation would seem to accomplish that partitioning nicely.

Effectively no HSDPA here in the States. AT&T has a small amount of HSDPA coverage, and seem to be quite happy in not offering more bandwidth to their customers, instead letting them chafe under its inadequate EDGE networks until they will pay anything for a decent broadband network.

2007 Aug 23 10:23 AM