German Court Upholds T-Mobile's iPhone Exclusivity

T-Mobile can sell Apple's sought-after iPhone exclusively locked to its own service, a German court ruled Tuesday, reversing an injunction last month requiring the company to sell an unlocked version in Europe's biggest economy.

The Hamburg District Court said Tuesday that T-Mobile, part of Deutsche Telekom AG, could indeed sell the phone, coupled with a two-year contract, that could not be used on networks provided by rival wireless companies.

The arrangement is similar to those Apple Inc. has with other carriers around the world. In the United States, AT&T Inc. is Apple's exclusive partner.

"We are pleased with the outcome," T-Mobile spokesman Rene Bresken said. Shares of Deutsche Telekom gained 1.2 percent after the decision to 15.28 euros ($22.41) in Frankfurt.

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The company will stop selling an unlocked version but said that after customers' contracts expire, it will unlock their iPhone at no charge.

The iPhone made its German debut on Nov. 9 — available only with the two-year contract from T-Mobile. The German unit of rival Vodafone Group PLC protested that at the Hamburg court.

That court agreed, issuing an injunction barring T-Mobile from offering the iPhone tied to the minimum 24-month contract and from selling it only with a so-called SIM lock that prevents users from switching the device to any other operator's network.

T-Mobile had appealed, but in the meantime offered an unlocked version of the phone priced at 999 euros, or nearly $1,500, more than twice the 399 euro ($585) price of a phone sold in combination with the contract.

Companies routinely offer phone discounts to customers who sign up for lengthy contracts.

Apple's strategy thus far had been to offer the iPhone through an exclusive mobile operator for each region: AT&T Inc. in the United States, O2 in Britain, T-Mobile in Germany and France Telecom's Orange wireless arm in France.

It also has issued software updates that have disabled the workarounds hackers developed to get the iPhone to work on other networks.

Apple faces two consumer lawsuits in the United States that accuse the company of unlawfully restricting consumer choice by preventing users from unlocking their iPhones.

Named invention of the year by Time magazine for its design, feel and pioneering software, the iPhone has won over users since it debuted June 29 in the United States.

Cupertino, California-based Apple has sold over 1.4 million iPhones so far and hopes to sell 10 million in 2008, helped by its launch in Europe, then in Asia next year. In Germany, 10,000 sold on Nov. 9 alone.

In the United States, AT&T sells the 8-gigabyte iPhone for $399, having slashed the price by a third about 10 weeks after its debut.

Consumers in Britain pay about $556, while in France, Orange is selling unlocked handsets to comply with French consumer law for $950. European price tags include value-added tax.