German Court Rules iPhone Locking Legal

l-ascorbic writes "A German court has overturned Vodafone's temporary injunction against T-Mobile. Two weeks ago, the British mobile network won an injunction forcing T-Mobile to sell iPhones that were not locked to its network. Vodafone argued that locking is an anti-competitive practice, and sought to force the German network to permanently allow the use of the phones on other networks. After the injunction was granted, T-Mobile offered the unlocked phones for €999 ($1473), and these will now be withdrawn from sale."

Comments

Re:999 euros?!

[Darth]

If you read some of Apple's statments when they released the iPhone they mention that they're figuring the revenue differently. They said that the revenue from iPhones would be spread out over the term of the service contract.

When Apple said that, they were referring to realizing the revenue for accounting purposes. Apple is spreading the realization of the revenue for the sale of the phone to the customer over a 2 year period. The reason for this is Sarbanes-Oxley.

Due to Sarbanes-Oxley, Apple cannot provide firmware updates to the phone that add features after they realize the full cost of the phone. To avoid a situation like with the 802.11n issue where they had to charge $1 for the update, they spread the revenue over 2 years and can then do firmware updates without running afoul of the law.

The actual price of the phone has nothing to do with this issue and the revenue from the unlocked phones would still have to be realized over 2 years to avoid legal issues with updates.

(basically, Sarbanes-Oxley says you cannot realize revenue for a sale until you have given the customer the entire product. I believe this was in response to Enron's practise of selling its own subsidiary oil, recording a profit from the sale, and never actually shipping the oil. Since they owned the subsidiary, it never complained, and they could turn around and sell the same oil again to someone else.)

My impression was that AT&T was actually paying Apple a share of the monthly service charges.

That is correct. This revenue is not part of the sale of the hardware, though, so it doesn't count with respect to Sarbanes-Oxley requirements.