Apple’s “Exclusive German Partnership” With E-Plus Could Mean Contract-Free and Subsidized iPads Internationally
The iPad in Germany will have data plans from at least three carriers on launch, Cult of Mac has learned.
In a surprise move, Apple isn’t partnering with T-Mobile, the official iPhone carrier, but E-Plus, the country’s third largest mobile operator.
However, not to be left out, T-Mobile is also preparing to offer a low-cost data plan for the iPad.
T-Mobile’s move as well as recent announcements by other European providers illustrates the likelihood that multiple carriers in several countries around the world will offer competing data plans for the iPad, which should drive down monthly data costs and also result in heavily subsidized iPads offered by multiple networks to anyone who is willing to sign a traditional contract.
It may also indicate that month-by-month 3G off-contract will widely be available both in Europe and abroad through Apple’s exclusive iPad 3G partners.
According to our source within T-Mobile, E-Plus and T-Mobile are not equal partners in Germany’s iPad launch. E-Plus is Apple’s “exclusive iPad 3G partner”, while T-Mobile will be countering with at least one “affordable iPad 3G plan” of its own.
What “exclusive partner” means when referring to an unlocked device like the iPad is unknown, but it seems to indicate that E-Plus will offer a similar contract-free, month-by-month 3G data plan as AT&T. In fact, E-Plus already offers such a month-by-month 3G plan for as low as €15 a month through their MEDIONMobile sub-brand.
Why was E-Plus given the Apple nod instead of T-Mobile? In Germany, E-Plus is known as being one of the most flexible mobile providers, offering numerous differently priced contracts and pay-as-you-go options under a large umbrella of distinct sub-brands. In contrast, T-Mobile is a much more rigid provider, known for appealing most to the business market within Germany.
Given those circumstances, E-Plus is uniquely position in Germany to offer month-by-month 3G in a way that T-Mobile is not. Instead, T-Mobile would go a more traditional route: they will offer the iPad 3G at a subsidized price to German customers willing to sign a contract.
T-Mobile would not be the first telecom to plan to subsidize the iPad without a direct partnership: Austrian mobile provider Hutchison Telecom said as early as February they will offer a heavily discounted iPad in exchange for a two year contract.
But E-Plus and T-Mobile are not the only providers in Germany planning to offer the iPad. Vodafone has also announced they will be offering the iPad 3G in Germany. The distinction here is that Vodafone, like T-Mobile, is not an “exclusive partner.” We speculate that this means that their plans are to use subsidized iPads to get new customers to sign contracts, where as E-Plus will be the provider the iPad 3G ships with and who will widely offer Apple endorsed month-by-month data plans.
Germany is not the only European country where all of the major mobile providers will be offering the iPad. In the UK, the “big three” — Orange, O2 or Vodafone — have all announced intentions to offer “dedicated tariffs” for iPad 3G customers. It’s worth noting, however, that none of these companies have declared themselves to be Apple’s “exclusive iPad 3G partner”… leaving only mobile provider Three unaccounted for.
This could be a huge shift in the way exclusivity deals and subsidies occur in the mobile space. Providers usually set the terms on how a new mobile device is sold: they agree to offer a mobile device to their subscribers, but the device manufacturer needs to agree to carrier exclusivity, and the customer needs to agree to a two-year contract. They don’t have to compete for customers who want a specific device.
With the iPad, though, Apple would be picking “exclusive partners” based on whether or not they are willing to offer month-by-month 3G to customers who purchase the iPad at full price, while other mobile providers will compete by offering heavily discounted iPads on contract. The end result would be lower prices for everyone through competition.
Can we expect the same thing to occur in the United States that appears to be happening in Europe? It’s not likely, says analyst Michael Gartenberg.
“The problem with the idea of competing plans in the US is the fact that Apple is currently building around GSM technology. That means, at best, the only other carrier besides AT&T who could offer the device would be T-Mobile, and even that would require a different SKU with a different radio as T-Mobile and ATT use different bands for 3G.”
“Bottom line,” Gartenberg explains, “is that unless Apple decides to embrace CDMA which could enable Verizon or Sprint, we’re not likely to see that model happen here anytime soon.”
In Europe, though, Apple may have finally succeeded in breaking the back of ubiquitous carrier lock-ins. Everyone who wants an iPad will be able to afford an iPad on their own terms. Can’t afford to pay full price for an iPad 3G? Sign a contract and a telecom will subsidize it for you. Don’t want to agree to a two year bill? Buy an iPad directly from Apple and get 3G whenever you want from an exclusive partner.
If so, Apple may have turned exclusivity and subsidization in the mobile space completely on its head, at least in Europe. Providing Cupertino’s gambit is a success, could it galvanize them to try and take the same approach to the next-generation iPhone as well?