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German Court Rules iPhone Locking Legal 146

Posted by kdawson
from the help-pay-for-the-patent-settlement dept.
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 After the injunction was granted, T-Mobile offered the unlocked phones for €999 ($1473), and these will now be withdrawn from sale."
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German Court Rules iPhone Locking Legal

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  • Ich bin ein unlocker (Score:2, Interesting)

    by Anonymous Coward on Wednesday December 05, 2007 @01:05AM (#21581767)
    nothing to see here...technical competence will trump DRM every time. Something about information wanting to be free. The US phones are unlocked, the German phones will be too. Just this way, the carriers won't make any money off the unlocking. Remove nose, face, spite. Amazing companies still don't get it.
  • by calebt3 (1098475) on Wednesday December 05, 2007 @01:06AM (#21581771)
    Will the already-sold phones remain unlocked? Or is another bricking patch on the way?
  • by Mukunda_NZ (1078231) on Wednesday December 05, 2007 @01:20AM (#21581863) Homepage
    What about the stupid German anti-hacking laws? Or is it okay for corporations to circumvent this kind of restriction? I'm guessing it probably is... But I wonder what would have happened if it was just individuals doing this, would it have been allowed then?
  • 999 euros?! (Score:3, Interesting)

    by RuBLed (995686) on Wednesday December 05, 2007 @01:35AM (#21581931)

    T-Mobile offered the unlocked phones for 999 ($1473)


    That's the first thing I had noticed. Is that the true cost for an unlocked iPhone? I had thought selling a phone for $500 is insane, I might have yet to see everything...
  • by Alwin Henseler (640539) on Wednesday December 05, 2007 @02:10AM (#21582109) Homepage
    From the article:

    In the two weeks since the temporary injunction was granted, T-Mobile sold the handsets without a network contract for 999 euros ($1,477; £719). That price was a significant premium to the 399 euro cost for a phone with a two year T-Mobile contract.

    A significant premium indeed, 600 Euro extra NOT to be locked into a T-Mobile contract. For that reason alone, you can be pretty sure that phones sold as unlocked, will stay that way (and functional). Consumer protections are pretty strong in Germany. If a firmware update would re-lock or brick those phones, Apple or T-Mobile would face a class-action lawsuit, and surely lose it.

    Probably more interesting is how Apple will provide firmware updates for these unlocked phones, as compared to updating phones that are locked to a specific provider. If it works exactly the same for locked and unlocked phones, that should give clues for a reliable/safe hack (that doesn't risk bricking your phone with future updates). If the procedure is different, that should give good info as to what exactly makes the phone locked. Either way, the mere existence of legally unlocked phones should be a boon for hackers (thank Vodafone for this side-effect of the temporary injunction).

    Although it's a nice piece of hardware, I'd rather throw my money at one of these OpenMoko [openmoko.com] phones (when they're released as consumer-ready).

  • by freedom_india (780002) on Wednesday December 05, 2007 @02:15AM (#21582119) Homepage Journal
    Why is Europe always so far ahead of us in this regard?

    Because they are actually funded directly by the people. And not by corporates.

    Take for instance BBC: It is a public funded news organisation and is the exact opposite of FOX. So BBC has no incentive to like corporate-sponsored candidates and they can actually be true reporters.

    Take France: They always hate monopolies, hate corporatocracy, hate anything US-mass made. So for them to rule against Apple is understandable.

    Germany: Tricky case. The judiciary is fiercely anti-monopolistic but yet corporate friendly. The parliment is neutral and they are bound by EU laws. And secondly German-made products are faaar superior in quality than chinese-products.

    Poland: Fiercely anti-monopolistic and strongly pro-consumer. Alarms corporates a lot.

    Finland/Norway/Sweden: All these 3 have totally different but radically same policy: As long as its made in EU they support it. If not in EU, they have a NIH syndrome.

    Italy: Let them first get their postal service to work.

    Belgium: They can't decide if they want to remain an independent country.

    To conclude: EU is mostly pro-consumer and is not awed by corporate money power primarily because EU member presidents and parliments are funded by taxes and public funds, and not by corporates directly.
    So they can afford to be altruistic !

  • by jonwil (467024) on Wednesday December 05, 2007 @02:17AM (#21582133)
    The official unlock involves a piece of data that is stored on the phone and likely also stored on a server at apple. When you unlock it, iTunes reads stuff from the iPhone, sends it to apples server which looks it up in the database. If the phone is marked "ok to unlock", apples server sends back further data (which is unique to the phone) and iTunes sends it to the iPhone to unlock it.

    So short of some kind of hack attack or raid on apples data center (both of which are 100% illegal and will probably get you thrown into federal pound me in the ass prison) you cant find a way to unlock the iPhone the same way as Apple does. You MIGHT be able to brute-force the unlock data for one specific iPhone but that wont help unlock other iPhones.
  • Re:Oh please... (Score:5, Interesting)

    by DustyShadow (691635) on Wednesday December 05, 2007 @03:11AM (#21582389) Homepage

    The bottom line is I should be able to do what i want with something i pay for, and apple can fuck off and die if they think their control should extend past the sale (or any vendor for that matter)
    A little off topic here but the Supreme Court is taking up this issue right now in the LG v. Quanta case. It's a case that asks whether patent owners can impose restrictions on what you can do with a product after you buy it [eff.org]. The law right now says that they can restrict you however they want by using licenses. Many are saying that the Supreme Court only hears cases from the Federal Circuit when they want to reverse them so you just may get your wish.
  • Re:Okay I'll bite... (Score:4, Interesting)

    by totally bogus dude (1040246) on Wednesday December 05, 2007 @03:31AM (#21582459)

    My understanding is that a lot of American phones are "feature locked" as well, i.e. certain features are disabled in order to force (coerce) you into using the higher-priced Telco features. I've heard really crazy sounding things like Bluetooth being disabled so you can't copy songs to the phone for free, you have to download them from your Telco. Is this hogwash, or does it have some basis in reality?

    Also, the phone companies do care if you pay out the contract and leave; a lot of their market value is determined by the number of subscribers they have. While it's true they won't care about an individual subscriber leaving, they do care in the statistical sense.

    I'm in Australia and the UK contracts sound similar to what we have. My latest phone (N73) is with 3, and interestingly enough they appear to subsidise the cost of the phone. I'm paying $22 a month for the handset over 2 years, which works out to be a little bit cheaper (around $100 IIRC) than buying it outright would have been. I guess there might be some trick with depreciation, but I was expecting to end up paying more for the phone over the period in exchange for the convenience of lower upfront costs.

    I can't remember the exact terms of unlocking in my contract, nor even whether the phone is network locked at all (I think most consumers don't really care, if I didn't like the plan they offered I wouldn't have signed up for it). I think it's free after a certain period of time.

  • Re:999 euros?! (Score:5, Interesting)

    by Darth (29071) on Wednesday December 05, 2007 @04:47AM (#21582723) Homepage
    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.
  • by veso_peso (1029298) on Wednesday December 05, 2007 @05:37AM (#21582939)

    Take France: They always hate monopolies, hate corporatocracy, hate anything US-mass made. So for them to rule against Apple is understandable.
    Heh, it's quite the opposite. France insisted that competition to be removed from the major EU "goals" from the Lisbon treaty. There are lot of state-run and private quasi monopolies and laws restricting competition, for example in retail and transportation.
  • by hughk (248126) on Wednesday December 05, 2007 @05:39AM (#21582953) Journal

    Some BBC reporters are very good, but typically the best stuff is either on domestic radio (say John Humphrys [bbc.co.uk] on Radio 4) or BBC World. Listening to Humphrys doing an interview is really like hearing a maestro at work, dissecting politicians of all sides for breakfast but sympathetically talking with a disaster victim. Domestic BBC TV seemed not so good on my last visit there (even Jeremy Paxton who handles the late-night news), and actually there seemed to be better coverage of issues in drama than on the news proper.

    As for Al Jazeera, they received a lot of assistance from the BBC in the early days and some staff moved across. Al Jazeerah, may be broadly pro-Arab, but it prides itself on not being too close to any particular regime.

  • Re:Okay I'll bite... (Score:3, Interesting)

    by Builder (103701) on Wednesday December 05, 2007 @05:50AM (#21582985)
    I think you're missing a major point here though... I rely on having unlocked phones and always will, but I still keep to my O2 12 month contract.

    I travel in Africa a lot and in many places out there, I cannot roam on my UK sim. So when I'm in-country, I simply remove my O2 sim, put it in my wallet, and load up a local sim.

    I couldn't do this with an unlocked phone.

    Both O2 and Vodaphone supply phones unlocked (except for the iPhone from O2) and this is a major reason I stick with these providers (depending on signal where I'm living at the time).
  • Re:999 euros?! (Score:3, Interesting)

    by hughk (248126) on Wednesday December 05, 2007 @05:51AM (#21582989) Journal
    Not quite true, SarbOx may constrain write-down, but it does not prevent the addition of new features. Apple sees a revenue stream from the air-time reseller - this is the key item. If it doesn't, it needs to realise those costs up front. As far as ongoing firmware updates, these are generally a combination of ongoing support (needed for the lifetime of the warranty or contract) and new functionality. There is nothing to stop Apple from separating the firmware fixes from those that add functionality, but that would cost more. Warranties in Germany for electronic goods are two years as standard.
  • Re:Oh please... (Score:3, Interesting)

    by adolf (21054) <flodadolf@gmail.com> on Wednesday December 05, 2007 @02:44PM (#21588089) Journal
    And if I buy an iPhone without a contract, what then? I guess it'd be mine, wouldn't it?

    But even if I buy it WITH a contract, it's just a contract for AT&T service. I still get to use the phone however they want, on whatever networks I want -- I'm just obligated to continue to pay AT&T for the duration of the contract term.

Facts are stubborn, but statistics are more pliable.

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