UK gets iPhone “competition” but no price war
The iPhone will launch on a second British network next week, but with little in the way of price competition. It could be an indicator of what competition for AT&T could mean in the much larger U.S. market.
The launch of the iPhone on Orange on Nov. 10 will end O2’s exclusivity in the United Kingdom. However, would-be users hoping the competition will cause price drops appear to be out of luck.
For those taking the “standard” two-year package, Orange’s monthly fee of £34.36 (approximately $56) is identical to 02’s fee, while the handset price of £87 ($142) is barely below the £87.11 which O2 buyers pay. An 18-month deal widens the gap a fraction, though the total cost of handset and subscription fees is still just 84p ($1.37) cheaper than the 02 equivalent.
It appears therefore that the only real competition Orange offers is in the area of signal coverage. That will be an issue for some users, but won’t do much to attract potential buyers put off by the current price.
It also raises questions about what will happen to pricing when a third network, Vodafone, carries the handset from next year.
Clearly the near-identical pricing is no coincidence, but the cause is open to question. The two networks having agreed to keep prices so similar would be illegal, but Orange may have independently decided to avoid a price war.
However, it’s also possible Apple has had some input into the pricing similarities, either indirectly (through its subsidy arrangements) or via direct pressure. That would be a bad sign for U.S. customers hoping for price cuts if and when AT&T loses its exclusivity deal. Most, thought not all, analysts predict that will happen sometime next year. However, the chances of Verizon carrying the device anytime soon have been lowered by its explicit attacks on the iPhone in its advertising for the new Motorola Droid.
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