O2 finds Apple revenue-sharing to its taste
O2, the mobile phone company, laid the groundwork yesterday for an announcement of a tie-up with Apple to sell the US firm's iPhone handset. — Peter Erskine, the O2 chief executive, defended Apple's insistence that it receives a share of revenues from calls made on iPhones.
Context & Ripple Effects
The arc here runs back to early July, when the BBC first reported O2 was in line for the UK iPhone contract and the Guardian reported Vodafone walked away from Apple's demand for a large slice of call revenues. By late August the Financial Times had Apple securing revenue-sharing deals across Europe, with The Register naming T-Mobile, Orange and O2 as the carriers involved.
Today's Times piece adds O2's own voice to that sequence: chief executive Peter Erskine publicly defends Apple taking a cut of iPhone call revenues, and the paper reports groundwork being laid for an announcement — though the tie-up itself remains unconfirmed at this point. The significance is that a major UK carrier is endorsing, on the record, the very terms that scared Vodafone off.
First-order effects
- Vodafone's refusal to meet Apple's terms leaves the UK iPhone slot to O2, which now trades margin on voice and data revenue for exclusivity on the most anticipated handset of the year.
Second-order effects
- With T-Mobile and Orange already reported into Europe-wide revenue-sharing agreements, rival operators face a choice between accepting Apple's economics or conceding flagship-device cachet to competitors — pressure that reshapes how handsets are subsidised and bundled.
Third-order effects
- If the pattern holds, the balance of power in mobile shifts from network operators toward device makers, with carriers competing to pay hardware vendors for differentiated access rather than the other way round.
The trend: Carrier economics are being rewritten by Apple's device-first bargaining power, turning exclusive handset distribution into a paid privilege rather than a negotiating win.