Etisalat (and du) planning to lock future iPhones?

Number portability is already confusing me (what happens to the data plans?) but regardless, people should not just look at the price of the iPhone itself. Even if both carriers end up locking the device, what matters ultimately is the data plan prices since in essence you can make up for the higher device cost until your investment breaks even

Hi Kinan, normally, if you want to migrate a number to a new mobile porvider, and you are in the middle of an existing contract, you would have to pay off the balance (plus a small migration fee).

I think it does depend on the operator as well. In Singapore, all 3 mobile operators offer unlocked handsets at subsidized rates when subscribers sign up for a 12-month or 24-month contract against various types of rate plans. Obviously, the longer the contract period and the higher the monthly fee of the rate plan (which comes with more benefits than a cheaper one), the greater the subsidy.

When a subscriber terminates his/her contract prematurely, there is an early termination charge against the handset (depending on the duration of the contract remaining), and against a percentage of the unfulfilled contract, though it is never the full balance of the contract.

I believe this is also the practice in a number of telcos around the world.

Oliver, du does not offer 'authorized unlocking' because the iPhones sold by du are not carrier-locked in the first place.

The 'authorized unlocking' you are referring to may be the device activation service that du offers for customers who want to use their iPhones from the point of purchase, rather than having to go home, install iTunes and activate it on their own. If not, please explain your understanding / interpretation of 'authorized unlocking' since du's iPhones cannot be unlocked as they were never locked in the first place.

The headline reeks of sensationalism, aka yellow journalism, designed to mislead readers into thinking that either carrier plans to lock future iPhones, without any actual facts to support the speculation.

You say that "...signs suggest that consumers who are willing to stomach iPhones that are locked to etisalat will be able to enjoy cheaper iPhones in the new year!". Please share with us the 'signs' you speak of.

At this rate, you might as well base your next article speculating that Steve Jobs is going through a remission, and that Apple stock prices will fall, leading the company into a downward spiral and into Chapter 11. Wouldn't that be so much more sensational?

Hi Ghoonk, thanks for responding - but let's just be clear that I'm simply reporting what has already been posted elsewhere, and speculating in my own blog here!

Authorised unlocking refers to carrier unlocking, not the iTunes activation process.

Firstly, I stated that according to Apple's website, du does indeed offer authorized unlocking. It is true that currently du don't sell locked iPhones, but let's not assume that this will always be the case. In fact it makes very little sense as it stands today, and it makes me wonder about both du and etisalat's plans for the future, particularly with the recent announcement of number portability by early 2010.

To respond to your second point - carrier-locked iPhones are historically cheaper than factory unlocked around the world. The same is true of all other handsets, not just Apples. This is good news for some, who intend to use their handset on only a single network, but bad news for others, who enjoy flexibility with their handset, especially when traveling.

In fairness, it may well be that both carriers will continue to offer full-price, pay as you go versions, alongside cheaper carrier-locked versions on a contract, as many european carriers do. I suspect that this may be why etisalat has help back on announcing any iPhone 3GS contracts yet.

Only time, or the telcos will tell!

Hi Oliver

Thanks for the reply. I do hope to keep this discussion constructive, and the following points are not meant to be confrontational. :)

1. A good journalist would not blindly regurgitate material from web sites without a clear understanding of the points to be made -- in this case, the fact that du sells unlocked iPhones makes the point that du does authorized unlocking moot.

2. Please cite your sources that du has plans to lock the handset. I'm not saying if they would or they wouldn't lock the handset, but since you've stated that it has been posted elsewhere, do share the link to support that statement.

Journalists, bloggers, reporters, columnists, etc, have a responsibility to deliver accurate, objective information to their audience, and have the responsibility of ensuring that their sources are reliable.

If not, then one needs to make it very clear that these are just rumors, nothing more. Do note, however, that in some countries, spreading a rumor further could lead to legal action -- e.g. going around saying that HH Sheikh Mohammed has cancer (which obviously is untrue) could land you in very hot soup, unless the information from your source has been properly verified. UAE press laws do apply to online content as well, which is why I have my concerns to ensure that the correct information is being presented to the audience.

3. You are assuming that the introduction of mobile number portability will result in carriers offering cheaper deals with SIM-locked devices. What is the basis of this assumption? Even an assumption has to have a reasonable basis for the argument to stand, but it appears that you are drawing a parallel between European and US telecom markets with that of the Gulf region.

Interestingly enough, when Etisalat was selling carrier-locked Blackberries, du chose not to follow that path, and did so again with the introduction of the iPhone. Historical evidence seems to indicate that du sees the point of unlocked handsets, and it would not be unreasonable to base an assumption that du would continue to offer unlocked handsets with excellent rate plans for the UAE market, and not to the contrary.

While it would not be impossible for du to SIM-lock the handset due to carrier subsidies, do note that it is only too easy for people in this country to buy handsets under contract and skip town the next day, as there are few, if any, laws that protect telcos in recovering such losses.

From a du or Etisalat perspective, your article is good news -- people will think the future is in SIM-locked devices and flock to stores to buy their unlocked devices today. :)

Hey Ghoonk,

Thanks for your taking the time to give your well thought out response. I value your reminder on the UAE's liberal press freedom laws! Just one more parley back from me :)

1. I'm not sure that it is a moot point - if du was planning on selling unlocked iPhones indefinitely, then why would they tell Apple that they're offering an authorised unlocking service? Yes, this is speculation, but it's not based on nothing.

2. I went back and had another look, but I'm not quite sure where you find slander in my post... if you point it out, I'll be sure to amend it. but I was careful not to say that du currently has plans to lock their handsets.

Of course, I agree with you that journalists have a responsibility to impartiality, but I'm not sure if the same applies to independent blogging. While blogging offers a powerful new medium for independent voices to access a larger audience, that doesn't automatically mean it should not be used to broadcast personal opinions, or speculation.

3. Number portability will result in a more competitive market, as consumers are able move their number at will to a new provider. In such an open market one strategy taken in order to retain customers and offer handsets by many providers is to offer cheaper handsets tied to that provider, hence the prevalence of carrier-locked iPhones and other high end handsets all over the world.

True, it's not unreasonable to assume that du will continue to offer unlocked handsets, but neither is it unreasonable to assume otherwise - besides, we're still left with the question as to why du have informed Apple that they offer authorised unlocking...

Apple makes it harder than most handset manufacturers to carrier-unlock their handsets, and that makes it very attractive for providers in a competitive market to offer lower priced handsets through long term contracts and bundles.

My article may or may not be good news for providers - people may equally wait and see whether either provider will offer cheaper iPhone packages that are tied to the carrier, at least until the contract has been fulfilled. It really depends on what the consumer is looking for - price vs flexibility. Personally, it seems obvious to me that like in the US and EU markets, consumers will embrace having the choice of cheaper, subsidized, locked handsets, vs more expensive unlocked handsets.

Thanks again for your engaged response, ghoonk, as a new blogger it's very helpful. You have have such a passion for the issue, I'm dying to know whether you have any vested interest in it yourself?

Parley is good, that's what keeps debates like these fun :)

1. We didn't tell Apple we were offering an authorized unlocking service. They just put it there. I just don't see the point of offering an unlocking service for devices that aren't locked in the first place, and we're not supposed to be unlocking iPhones from other carriers. Apple moves in mysterious ways :)

2. As far as I know, du currently has no plans to offer locked handsets. Handset locking certainly hasn't been popular with other networks, and a certain other network here was allegedly selling earlier model iPhones that were locked to their network, much to the chagrin and dismay of many people who bought thinking it was unlocked. Not a pretty surprise when you head off for a holiday back to the UK, only to find that your T-Mo or Voda SIM doesn't work ;)

Re: point on independent blogging -- as bloggers, we too, can be held accountable for what we 'say', especially in this country. Same applies in many other developed nations such as the US and Singapore (I use these two countries as examples as they are almost polar opposites where freedom of press is concerned).

3. The open market strategy you speak of is one I'm well familiar with, but sadly, it tends to work better in countries where there are more locals than expats, and there are controls in place to manage fraud and abuse. However, in the UAE, this is harder to enforce, so it does make sense to incentivize people to stay with a carrier rather than to prevent them from leaving. Until there is a way to prevent subsidized handsets from leaving the country and being unlocked in another, telcos here face huge fraud risks, and that just makes it harder to rationalize such a decision, unlike in the US and UK where a majority of the buyers are citizens and/or permanent residents. Besides, I wouldn't exactly call these countries paragons where financial governance is concerned -- AT&T recently declared some rather shocking news about their iPhone offering and profitability.

Understanding that there is a huge grey market in the UAE, and one which sees thousands of iPhones imported as unlocked or jailbroken handsets, one really questions if there is a need to further subsidize handsets (and Apple has very strict policies and conditions about subsidies), especially when retail and official iPhones are already being sold for less than grey market ones.

Vested interest? Well, in the interests of transparency, I work in du, and I launched the iPhone for them, but my contention was with the sources and basis of your assumptions, which gave me cause to wonder if there was a level of due diligence channeled into the conclusion that the headline proclaims -- that telcos may offer locked devices, and the article goes into to cite sources and 'signs' but does not provide links to either.

In short, I was debating the path you took to arrive at the assumption that telcos are looking to offer locked handsets, but not the final destination (i.e. that telcos are looking to offer locked handset) itself. It possible for du and Etisalat to offer long-term contracts, but with the ease of unlocking and jailbreaking handsets these days, it just doesn't make good commercial sense.

Of course, these are my views and do not reflect those of my employer ;)

That is great news for people like me helping people with their people's locked iPhones on the emiratesmac forums in what seems like a never-ending task. People want to use their devices in ways that are natural to them - the big business bastards Apple really ponied up to the telcos on this one with their online activation system. I supposed it makes sense when you consider who they're up against in the handset manufacturing market.

I'm very glad to hear people like you are saying the right things in the right places!

It's also very decent of you to come clean about your relationship with du - there was something in your tone that gave you away! Of course there are limits what you can discuss in your personal capacity, but I'm very pleased to hear from you, especially your clear assessment of the UAE handset market. It's a new game for me this blogging business, but I look forward to future criticism from you!

Perhaps simply putting a question mark at the end of my headline was not enough to highlight the speculative nature of my article. Of course I am responsible for what I write in the public domain, but what better format to call someone out in than a blog! I don't believe there is any slander in my article, but in our liberal press environment, I'll be sure to separate my opinions and reported sources most carefully in the future!

No harm done. :)

The UAE handset market is a fascinating one. I've been in and studying the telco market for years, and how telcos around the world handle the same problem with different solutions has always fascinated me. The UAE, being predominantly an expat community has always been difficult to regulate, and going with handset subsidies would put telcos at the same risk as banks when they generously offered huge lines of credit, thinking 'what's the worst that could happen'.. in the end, bad debt is forcing a lot of banks to rethink their lending policies, and that means that people who screwed the banks over got away scot-free, while people who need loans are now unable to secure any.

Customers and telcos have a symbiotic relationship, and it doesn't make sense to screw either one over. Likewise, I had, in an earlier comment, discussed how true 'unlimited' mobile broadband really hurts the majority of users when a small minority abuse the system.

We should have a coffee sometime with Magnus :D

And you know i'm pulling your leg about the slander/libel thing, right? It's not as serious as I made it out to be, just wanted to see if you'd bite ;)

Coffee definitely. Will get in touch with Magnus about that.

So basically you agree to disagree on the conclusions!? I take the point though that we should be more careful, myself included, with what we state as facts, opinions, rumors, etc. They are not the same and it can easily be misunderstood.

One thing I'm very glad about is that the posts of the blogging crew are getting read and noticed. We just need to keep monitoring how it all develops and figure out how to best manage this. We're new at it and I think the ME business world is also pretty unfamiliar with this as well.

Yep. I'm not disagreeing with the assumption, only challenging how one arrived at that assumption, given the absence of sufficient facts. Speculation is always fun, though, and that's just oh-so-common in the Apple world -- Apple iPhone 4G anyone? How about the iTablet? All fine and dandy, and fun to read, but at some point in time, people start discounting the sites that have rumours but nothing to back them up.

For example, some of the Apple rumours are based on leaks or recent filings with the US Patent Office and with the FCC, so there's some meat in there. That sort of meat lends weight to speculation, and makes for good reading.

Speaking of which, next time you guys decide to throw in an article like this, let me know in advance so I can buy some shares in du. I'm sure people are clamoring to buy their unlocked iPhones from du now before MNP comes around and devices get locked. Stock prices are going to soar with our next shipment, I can get rich, and retire to a nice beach in the Bahamas :D

Glad we could be of service to increasing business at du :-)

iPhones sell themselves, and they sell like hotcakes. Note to self: Buy lots of shares next time!

This was posted under the "blog" category so Oliver is free to speculate as he wishes. Let's wait to see his response first :-)