Exclusive handset offerings are certainly good for carriers and are probably good for handset makers too as they help drive up the price during negotiations – presuming there is a demand for said device in the first place. But it’s hard to see how they are ever in the interest of consumers who end up paying more through higher tariffs via the subsidy merry-go-round.
That’s because exclusives create a monopoly by any other name. In the case of the iPhone, if you want Apple’s iconic device here in the UK, you have no real choice but to become a customer of O2. Thankfully, that’s set to change with rival carrier Orange announcing that they have partnered with Apple to officially offer the iPhone.
Logically, based on my reasoning above, this added competition — the newly formed duopoly – should lead to greater competition and therefore lower prices for consumers. However, where Apple is concerned, I wouldn’t count on it. My bet is that the iPhone tariffs and up-front pricing will remain fairly close to where they are today, for the time being at least, and that Orange’s offering will be similar to O2′s. Such is demand for the iPhone, Apple is unlikely to have had to reduce what it charges either carrier in concession to ending exclusivity.
Instead, Orange will have paid ‘whatever it takes’ to secure the device as a strategy to acquire and retain high end customers who are crying out for the iPhone.
O2 the same.
(I’m basing this, in part, on reports that T-Mobile UK have been unofficially offering Apple’s device to its most profitable customers as a last ditch attempt at stopping them from leaving.)
So what will UK consumers get from the end of O2′s exclusivity? Better 3G coverage might well be the answer. Or at least a genuine choice of 3G networks.
As a side note, I was a customer of Orange UK for my first ten years of mobile. I left the carrier a few years ago not because they were a little more expensive than their cheapest rival but because they didn’t offer the handset I wanted at the time (the Nokia E61). Ironically, I could be about to leave my current carrier — 3 UK — in favor of O2 as they have the exclusive on the Palm Pre.