IPhone Must Be Offered Without Contract Restrictions, German Court Rules

PARIS, Nov. 20 — Last month, French law forced Apple to promise that consumers could buy a version of its iPhone in this country without having to be locked into a long-term contract with Orange, the only mobile phone operator offering the new device.

Now, the same issue is tripping up Apple’s plans to sell the music-playing cellphone in Germany, the largest European telephone market. Last week, the Vodafone Group won the first round of a legal case against T-Mobile over its exclusive deal to sell the iPhone there.

A German court ruled that T-Mobile must offer the iPhone to everyone, even without the 24-month contract that it had required for buyers of the phone, which went on sale in Germany for 399 euros ($591) on Nov. 9. T-Mobile is appealing the ruling.

Vodafone of Britain had tried to secure its own pan-European exclusive deal with Apple for the iPhone. A spokesman, Simon Gordon, said the company was not trying to block the sale of the device but rather trying to level the playing field in Germany. Vodafone operates Vodafone Germany, the No. 2 German carrier. T-Mobile, a subsidiary of Deutsche Telekom, is the industry leader there, with 34 million customers.

Various European countries have laws that protect consumers from being forced to buy something else as a condition of buying a product. Britain does not have the same kind of restrictions, allowing O2, a mobile network operator owned by Telefónica of Spain, to sell the iPhone there with an 18-month exclusive contract.

Although Apple has announced sales plans for only the three largest European markets, restrictions on whether carriers can tie or subsidize phones also exist in several other Continental countries, including Belgium, Italy and Finland.

T-Mobile’s position is that tying a mobile phone to a contract with one provider is rare but not new in Germany, while Vodafone argues that all mobile phones sold there should be available for use with any provider. T-Mobile insisted that iPhone sales would continue uninterrupted, but warned that it reserved the right to seek damages from Vodafone.

The iPhone is scheduled to go on sale next week in France. The exclusive French carrier, Orange, a subsidiary of France Télécom, has not disclosed any details of the purchase, like the minimum length of the contract for locked models, or the cost of the unlocked model. An Orange spokeswoman, Béatrice Mandine, did not return phone calls seeking comment on Tuesday.

The iPhone competes directly with models from Nokia and Sony Ericsson, which have the widest offerings in phones that combine digital music players and cellphones, according to an analysis released this month by the consulting firm M:Metrics. The consultancy also said that the demand for premium phones and features was stronger in Europe than in the United States.

A year ago, a French court ruled against Sony’s requirement that songs sold in its online music store be played only on Sony devices. Apple faces a similar court challenge in France over its iTunes songs, which are tied to the iPod. The iPod’s music- and video-playing features are built into the iPhone.

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