Under pressure, T-Mobile unlocks iPhone in Germany

T-Mobile in Germany will sell an unlocked version of Apple's iPhone while it fights a legal challenge from rival Vodafone.

T-Mobile will sell an unlocked version of Apple's popular iPhone in Germany while it fights a legal challenge from rival Vodafone, the company said on Wednesday.

The move comes two days after a court granted an injunction requested by Vodafone mandating that T-Mobile either sell an unlocked version of the iPhone or withdraw the product from the market.

Vodafone contends German competition law prohibits an operator from selling a locked phone with a two-year contract. At midday Wednesday, T-Mobile announced it will sell an unlocked version of the iPhone for Euro 999 (AU$1,708). T-Mobile sells a locked 8G-byte iPhone in Germany for Euro 399 including 19 percent value-added tax.

However, T-Mobile is appealing the injunction and will withdraw the unlocked version if the company prevails, said Klaus Czerwinski, a T-Mobile spokesman, based in Bonn. T-Mobile is also considering filing for damages against Vodafone.

"We think the law does not apply to this situation," Czerwinski said. "We are still going to court."

The unlocked version means that users can put in a SIM (Subscriber Identity Module) from another operator and subscribe to a different -- and perhaps cheaper -- service plan.

European consumers are used to getting free or heavily subsidized phones if they sign up for a long-term contract, but those handsets usually won't work on other networks. Unlocked phones command a higher price.

Apple's strategy of securing agreements with just one operator has rankled many interested in the iPhone. The iPhone's relatively high price and 18- to 24-month service contracts caused hackers to find ways to break the software locking the phone to one operator. Apple has been patching its software to nullify the hacks.

Vodafone said users who opt for the unlocked version will miss out on some of the features that are exclusive to the company's network, such as the iPhone's Visual Voicemail, which lets users select and listen to messages, Czerwinski said.

By the end of next month, Vodafone will have the only nationwide EDGE (Enhanced Data Rates for GSM Evolution) network coverage throughout Germany, Czerwinski said. EDGE enables download speeds between 70K bps (bits per second) to 135K bps.

The iPhone can use EDGE and Wi-Fi networks but lacks 3G (third-generation) capabilities. Vodafone contends its flat-rate data traffic package is the most competitive in the German market since the iPhone uses a lot of data.

Vodafone was among several operators vying to be the iPhone's sole supplier in Germany but lost out to T-Mobile. T-Mobile said it sold 15,000 iPhones when it went on sale in Germany on Nov. 9.

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