Skip to main content

The Globe and Mail

With iPhone 5 launch, Apple looks to tighten its grip on distribution

The iPhone 5 on display after its introduction during Apple Inc.'s iPhone media event in San Francisco, California September 12, 2012. 

Beck Diefenbach/Reuters

Apple Inc. is imposing new restrictions on at least some of its carrier partners ahead of the iPhone 5 launch next week, according to several sources.

People close to some of the Canadian carriers that are planning to sell the new device said Friday that Apple will not allow those firms to sell it in their stores without also activating the device.

In effect, that means users will have a harder time reselling the phones or shipping them to other countries where the iPhone may not have launched yet, or may not normally be available. As such, the move gives Apple more control over how and where its devices are sold.

Story continues below advertisement

According to a source, Apple had not required immediate activation as a prerequisite for sales for any of the previous iPhone models.

Many carriers offer unactivated phones at a significant premium – often for hundreds of dollars more than activated devices. For example, the cheapest version of the iPhone 5, bought through the Apple store unactivated, costs $700. The same device on a three-year contract from Canadian carriers costs roughly $180.

But while activated phones may come with a cheaper price tag up front, they are usually tied to long-term contracts that can add thousands of dollars to the overall cost of owning the phone.

Although many consumers gripe about the sheer length of the contract term, these agreements help lower the upfront cost of the device – and since many smartphones cost well over $500, carriers' subsidies can help boost sales. There has been a move by some levels of government to limit the financial penalties for breaking contracts.

Apple also reaps a reward as a result of the new regulations. Activations automatically trigger a fee paid to the iPhone maker by the carriers. In some cases, Apple may also receive a usage fee related to the new customer for some time period after the sale.

None of the three major Canadian carriers – BCE Inc.'s Bell Mobility, Rogers Communications Inc. and Telus Corp. – confirmed Apple's move on the record. However, sources close to all three companies indicated Apple would start applying the rule to iPhone 5 sales. A Canadian Apple spokesperson said the company would not comment on rumours or speculation.

Report an error Licensing Options
Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨