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11/21/2007
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T-Mobile To Sell iPhone In Germany Unlocked and Without A Contract

The company will offer the iPhone for 999 euros ($1,480) without a contract and for 399 euros with a two-year contract.

Deutsche Telekom's T-Mobile unit in Germany said Wednesday that it will offer the iPhone unlocked and without a contract following an injunction on its iPhone sales that had been issued by a German court.

DT said it will offer the iPhone for 999 euros ($1,480) without a contract and for 399 euros for consumers making a two-year commitment to the phone. The issue was brought to a head by Vodafone Group, the second largest mobile phone service provider in Germany. Vodafone sued DT in German courts.

Vodafone, which owns 45% of Verizon Wireless in the U.S., said it did not plan to challenge Apple's exclusive iPhone deals in other countries. The T-Mobile decision to offer the iPhone unlocked and without a contract goes to the heart of the "openness" issue that has been challenging the mobile phone business worldwide. In the U.S., Google's Open Handset Alliance seeks to open up cell phone access across different service providers.

Regulations governing the marketing of cell phones and cell phone service varies from country to country in Europe; Vodafone took advantage of German regulations and charged DT's T-Mobile operation violated competition laws. With France Telecom preparing to launch the iPhone in France next week, the exclusivity issue could be raised there, too.

In the U.S., Apple has an exclusive arrangement with AT&T to market the iPhone. There is some irony in DT's situation in the U.S. where its T-Mobile unit can't market the iPhone while its parent company has been forced to offer the coveted phone to all comers in Germany.

The $1,480 high price for a standalone iPhone is likely to put a lid on single sales of the phone, but the opening up of mobile phone networks in Germany could lead to bootleg sales of the phone acquired elsewhere.

While DT moved to comply with the orders issued by the German court in Hamburg, it noted that the dispute will be examined in detail at a hearing in two weeks; in the meantime, DT said it is reserving the right to claim damages from Vodafone.

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