IPhone Contracts With Carriers Under Scrutiny in Europe

Although they have not filed formal complaints, a group of European wireless carriers recently submitted information about their contracts with Apple to the European Commission, according to a person briefed on the communications with the carriers who asked not to be identified.

This person said the accusations focused on Apple’s contracts with French carriers, though other countries may also be involved.

In a statement, the European Commission, the union’s administrative arm, which oversees antitrust enforcement in the 27-nation bloc, confirmed that it was examining Apple’s carrier deals. But it said it had not begun a formal antitrust investigation. The commission is not obligated to act until it receives a formal complaint of anticompetitive behavior. That it is already examining the contracts suggests that it is taking the carriers’ concerns seriously.

“We have been contacted by industry participants and we are monitoring the situation, but no antitrust case has been opened,” said Antoine Colombani, a spokesman for Joaquín Almunia, competition commissioner of the European Union.

Elaborating at news conference in Brussels on Friday, Mr. Colombani reiterated that no formal complaints had been brought against Apple, and suggested that regulators would need to judge the relevance of any allegations in such a dynamic sector before taking any steps that could lead to a formal antitrust case.

An Apple spokeswoman, Natalie Kerris, said, “Our contracts fully comply with local laws wherever we do business, including the E.U.”

It was unclear how many carriers were in discussions with the European Union. Based on several interviews with people briefed on iPhone contracts, it appears that Apple’s contracts with some smaller European carriers were stricter than those with larger companies.

People briefed on the carriers’ relationships with Apple, who declined to be named because Apple does not permit them to speak publicly about the contracts, said the terms that some European carriers must accept to sell iPhones are unusually strict, making it difficult for other handset makers to compete.

The issues do not appear to apply to carriers in the United States; an executive at an American carrier said the terms of its contract with Apple were aggressive but not unreasonable. Apple is well known for tightly controlling the design of its products, down to the smallest of details, and closely controlling its manufacturing. Its relationship with carriers, long cloaked by strict nondisclosure agreements, offers a window into the similar levels of control Apple exerts on business partners who want to sell the iPhone.

While European carriers quietly grumble about Apple’s muscle in the marketplace, Apple does not force any of them to sell the iPhone — it does not need to. Carriers are petrified at the thought of not having the smartphone because it remains a huge hit with the public, driving waves of customers to their stores, especially in the months after the latest models are introduced and heavily advertised.

Apple’s contract differs with every carrier that sells the iPhone. Such sales accounted for 56 percent of Apple’s $55 billion in revenue last quarter. In most cases, Apple sets a quota for how many iPhones the carrier needs to sell over a set period of time, usually three years. If it does not agree to the quotas, it does not receive the iPhone.

If quotas are not met, the carrier is obligated to pay Apple for unsold devices, according to one person who negotiated with Apple while at a European carrier.

That remains a largely theoretical risk at this point, however, because demand for the iPhone still exceeds supplies almost everywhere it is sold. Apple’s iPhone 5 was the best-selling smartphone in the world during the fourth quarter of 2012, outselling competing models from Samsung, the biggest maker of mobile devices in the world, according to Strategy Analytics.

Charles Duhigg contributed reporting.

Bits Blog: What Cellphone Carriers Say About Hurricane Sandy Recovery

John Minchillo/Associated Press People waiting to use payphones in Brooklyn on Wednesday.

6:12 p.m. | Updated Adding the latest statement from Sprint.

Three days into the aftermath of Sandy, wireless service is still lacking in parts of New York City and other hard-hit areas, according to people living in those areas. The carriers have been struggling to keep their services running, mostly because of the loss of power. But they say they have been making progress. Here’s what they have to report.

Verizon Wireless said its network improved a bit. On Thursday, its corporate spokesman, Thomas Pica, said 96 percent of its network “from Maine to Virginia” was operating, up from 94 percent on Wednesday.

While that looks like a great number, Verizon is describing the whole Northeast, even the areas that didn’t have network problems to begin with. Another way to look at those numbers: 4 percent of Verizon’s cell sites are not operating in the Northeast, down from 6 percent Wednesday. From Wednesday to Thursday, Verizon shrank the portion of its network that was not operating by 33 percent. The company’s statement:

In terms of our network, we have seen continued improvement overnight with now more than 96 percent of our cell sites in service and serving our customers in the impacted area, including some of the hardest hit areas of the Northeast.

Verizon Wireless continues to deploy its mobile disaster recovery and emergency network assets, including cell sites on wheels and mobile generators, to fortify our network throughout the Northeast where telecommunications infrastructure, utility/power and/or flood damage are issues.

AT&T made a vague statement about its progress in troubled areas and declined to provide statistics. But it said it had made an agreement with Michael Bloomberg, mayor of New York City, to roll out RVs where people can charge their phones. Mr. Bloomberg has said AT&T would also provide satellite hot spots to shore up its network, although the details on that are not yet clear. AT&T’s statement:

Disaster response teams from AT&T are fully engaged and making progress in restoring wireless and wireline services in areas affected by Hurricane Sandy. The company is closely aligned with state and local officials and emergency response teams, monitoring service disruptions and coordinating our restoration efforts.

The vast majority of our cell sites in the Northeast are online and working. We are making progress in areas that were especially hard-hit, including New York City and New Jersey, where flooding, power loss, transportation and debris all pose challenges. We are working around the clock, including conducting ongoing damage assessment, rapid deployment of generators and equipment, and movement of key personnel from around the region and country, such as engineers and technicians, in order to restore service as quickly as possible.

Sprint was clearer about the status of its network, specifically in troubled areas, saying 20 percent of its network was still down in New York, New Jersey and Connecticut. It said on Thursday that it had made improvements but still faces challenges.

In New York, New Jersey and Connecticut, Sprint’s network is more than 80 percent operational, but challenges remain for the hardest hit areas of these states, including metropolitan New York City and portions of the New Jersey coast. In New York City, for example, approximately three-quarters of the network is operational, but challenges remain in obtaining commercial power, backhaul connections, and gaining safe access to cell sites.

T-Mobile USA, too, had some details. It said on Wednesday night that 15 percent of its network in New York City was down, and that in Staten Island 20 percent was still down.

T-Mobile reports good progress in restoring network service to areas in the path of devastation from Hurricane Sandy. Network technicians are working as quickly as possible to restore service by deploying generators to cell sites where power outages continue and to repair damage caused by high winds and flooding.

T-Mobile is working closely with the NYC Department of Emergency Management and with FEMA to gain safe access to areas of the City where storm damage was extensive, including parts of Staten Island and lower Manhattan. We’re happy to report that network restoration in NYC is now at 85 percent and Staten Island has improved to 80 percent. The agreement between T-Mobile with AT&T to share networks in N.Y. and N.J. is already providing customers of both AT&T and T-Mobile improved experiences in the hardest-hit areas.

Raw Data: Big Carriers Win an E.U. Victory on Landline Charges

Neelie Kroes, the European commissioner for telecommunications, signaled the new era July 12 when she announced that further cuts in wholesale access charges, a basic type of regulated fee that operators receive from rivals, would discourage network investment and thwart the commission’s goal of creating a superfast broadband grid by 2020.

The decision by Ms. Kroes, a Dutch policy maker who served as the European Union’s competition commissioner from 2004 to 2010, drew praise from big operators and criticism from smaller carriers, most of which lack national coverage of their own and must lease access to a former monopoly’s landlines to deliver their services to customers.

Besides giving operators more pricing power over their older copper networks, Ms. Kroes said she might permit them to ban competitors temporarily from the new, faster fiber networks that are crucial to fulfilling the commission’s broadband aspirations. The announcement was an about-face in European policy.

Ms. Kroes’s predecessor, Viviane Reding, who is now the European justice commissioner, had sued Deutsche Telekom over its decision to ban competitors from its new fiber grid, which uses a technology called V.D.S.L.

Ms. Kroes, an economist and member of the Dutch free-market People’s Party for Freedom and Democracy, has taken a softer tone with Deutsche Telekom, France Télécom, Telefónica and Telecom Italia than Ms. Reding, a Luxembourg conservative who in 2007 pushed through the first European retail price controls on mobile roaming charges.

Whether the new incentives translate into new networks is up for debate.

The European Union is far from its goal of wiring the 27-nation bloc with superfast broadband. Currently, half of E.U. residents have access to broadband with download speeds of at least 30 megabits per second. The goal by 2020 is 100 percent. Only 2 percent of E.U. households have access to the broadband speeds of 100 megabits per second. The commission’s goal is to cover half the E.U. population.

“These recommendations will encourage operators to invest, strengthen competition across all networks and allow alternative operators to compete on more than just price,” Ms. Kroes said in announcing the policy change.

Large operators, which have been lobbying for the concessions, cheered the change of direction in Brussels. “This will facilitate planning investments in next-generation networks,” said Luigi Gambardella, the chairman of the European Network Operators’ Association, the Brussels group that represents large operators.

The European Competitive Telecommunications Association, which represents smaller operators, said the decision would do the opposite. With the former monopolies allowed to extract large profits from old copper networks, carriers will have little incentive to build, they argued.

As a safeguard, Ms. Kroes said she would draft guidelines to discourage dominant operators from controlling access to landline networks to the disadvantage of rivals and consumers. But her recommendations require approval by E.U. countries and could be watered down.

The European Consumers’ Organization said it was surveying its members before responding. The same Brussels group criticized Ms. Kroes, saying she had set the initial retail price cap on mobile data roaming too high. The cap, which took effect July 1, is 70 euro cents, or 85 U.S. cents, per megabyte, a multiple of domestic rates.

For E.U. consumers, the new approach may usher in an era of rising prices, as operators ban competitors from the fastest networks and derive greater profits from old copper landlines. At least that is how telecommunications investors judged it. They bid up shares of European carriers 3.5 percent, on average, the day after the announcement.

Raw Data: Big Carriers Win an E.U. Victory on Landline Charges

Neelie Kroes, the European commissioner for telecommunications, signaled the new era July 12 when she announced that further cuts in wholesale access charges, a basic type of regulated fee that operators receive from rivals, would discourage network investment and thwart the commission’s goal of creating a superfast broadband grid by 2020.

The decision by Ms. Kroes, a Dutch policy maker who served as the European Union’s competition commissioner from 2004 to 2010, drew praise from big operators and criticism from smaller carriers, most of which lack national coverage of their own and must lease access to a former monopoly’s landlines to deliver their services to customers.

Besides giving operators more pricing power over their older copper networks, Ms. Kroes said she might permit them to ban competitors temporarily from the new, faster fiber networks that are crucial to fulfilling the commission’s broadband aspirations. The announcement was an about-face in European policy.

Ms. Kroes’s predecessor, Viviane Reding, who is now the European justice commissioner, had sued Deutsche Telekom over its decision to ban competitors from its new fiber grid, which uses a technology called V.D.S.L.

Ms. Kroes, an economist and member of the Dutch free-market People’s Party for Freedom and Democracy, has taken a softer tone with Deutsche Telekom, France Télécom, Telefónica and Telecom Italia than Ms. Reding, a Luxembourg conservative who in 2007 pushed through the first European retail price controls on mobile roaming charges.

Whether the new incentives translate into new networks is up for debate.

The European Union is far from its goal of wiring the 27-nation bloc with superfast broadband. Currently, half of E.U. residents have access to broadband with download speeds of at least 30 megabits per second. The goal by 2020 is 100 percent. Only 2 percent of E.U. households have access to the broadband speeds of 100 megabits per second. The commission’s goal is to cover half the E.U. population.

“These recommendations will encourage operators to invest, strengthen competition across all networks and allow alternative operators to compete on more than just price,” Ms. Kroes said in announcing the policy change.

Large operators, which have been lobbying for the concessions, cheered the change of direction in Brussels. “This will facilitate planning investments in next-generation networks,” said Luigi Gambardella, the chairman of the European Network Operators’ Association, the Brussels group that represents large operators.

The European Competitive Telecommunications Association, which represents smaller operators, said the decision would do the opposite. With the former monopolies allowed to extract large profits from old copper networks, carriers will have little incentive to build, they argued.

As a safeguard, Ms. Kroes said she would draft guidelines to discourage dominant operators from controlling access to landline networks to the disadvantage of rivals and consumers. But her recommendations require approval by E.U. countries and could be watered down.

The European Consumers’ Organization said it was surveying its members before responding. The same Brussels group criticized Ms. Kroes, saying she had set the initial retail price cap on mobile data roaming too high. The cap, which took effect July 1, is 70 euro cents, or 85 U.S. cents, per megabyte, a multiple of domestic rates.

For E.U. consumers, the new approach may usher in an era of rising prices, as operators ban competitors from the fastest networks and derive greater profits from old copper landlines. At least that is how telecommunications investors judged it. They bid up shares of European carriers 3.5 percent, on average, the day after the announcement.

Raw Data: Big Carriers Win an E.U. Victory on Land Line Charges

BERLIN — The era of steadily declining phone bills in Europe, which began with deregulation of the industry in 1998, may have drawn to a close this month, with the European Commission’s decision to give the biggest operators greater leverage over what they can charge competitors for access to their land line networks.

Neelie Kroes, the European commissioner for telecommunications, signaled the new era July 12 when she announced that further cuts in wholesale access charges, a basic type of regulated fee that operators receive from rivals, would discourage network investment and thwart the commission’s goal of creating a superfast broadband grid by 2020.

The decision by Ms. Kroes, a Dutch policy maker who served as the European Union’s competition commissioner from 2004 to 2010, drew praise from big operators and criticism from smaller carriers, most of which lack national coverage of their own and must lease access to a former monopoly’s land lines to deliver their services to customers.

Besides giving operators more pricing power over their older copper networks, Ms. Kroes said she might permit them to bar competitors temporarily from the new, faster fiber networks that are key to fulfilling the commission’s broadband aspirations. The announcement was an about-face in European policy.

Ms. Kroes’s predecessor, Viviane Reding, who is now the European justice commissioner, had sued Deutsche Telekom over its decision to bar competitors from its new fiber grid, which uses a technology called VDSL.

Ms. Kroes, an economist and member of the Dutch free-market People’s Party for Freedom and Democracy, has taken a softer tone with Deutsche Telekom, France Télécom, Telefónica and Telecom Italia than Ms. Reding, a Luxembourg conservative who in 2007 pushed through the first European retail price controls on mobile roaming charges.

Whether the new incentives translate into new networks is up for debate.

The European Union is far from its goal of wiring the 27-nation bloc with superfast broadband. Currently, half of E.U. residents have access to broadband with download speeds of at least 30 megabits per second. The goal by 2020 is 100 percent. Only 2 percent of E.U. households have access to the broadband speeds of 100 megabits per second. The commission’s goal is to cover half the E.U. population.

“These recommendations will encourage operators to invest, strengthen competition across all networks and allow alternative operators to compete on more than just price,” Ms. Kroes said in announcing the policy change.

Large operators, which have been lobbying for the concessions, cheered the change of direction in Brussels. “This will facilitate planning investments in next-generation networks,” said Luigi Gambardella, the chairman of the European Network Operators’ Association, the Brussels group that represents large operators.

The European Competitive Telecommunications Association, which represents smaller operators, said the decision would do the opposite. With the former monopolies allowed to extract large profits from old copper networks, carriers will have little incentive to build, they argued.

As a safeguard, Ms. Kroes said she would draft guidelines to discourage dominant operators from controlling access to land line networks to the disadvantage of rivals and consumers. But her recommendations require approval by E.U. countries and could be watered down.

The European Consumers’ Organization said it was surveying its members before formulating a response. The same Brussels group criticized Ms. Kroes, saying she had set the initial retail price cap on mobile data roaming too high. The cap, which took effect July 1, is 70 euro cents, or 85 cents, per megabyte, a multiple of domestic rates.

For E.U. consumers, the new approach may usher in an era of rising prices, as operators bar competitors from the fastest networks and derive greater profits from old copper land lines. At least that is how telecommunications investors judged it. They bid up shares of European carriers 3.5 percent, on average, the day after the announcement.

Cell Carriers See Rise in Requests to Aid Surveillance

The cellphone carriers’ reports, which come in response to a Congressional inquiry, document an explosion in cellphone surveillance in the last five years, with the companies turning over records thousands of times a day in response to police emergencies, court orders, law enforcement subpoenas and other requests.

The reports also reveal a sometimes uneasy partnership with law enforcement agencies, with the carriers frequently rejecting demands that they considered legally questionable or unjustified. At least one carrier even referred some inappropriate requests to the F.B.I.

The information represents the first time data have been collected nationally on the frequency of cell surveillance by law enforcement. The volume of the requests reported by the carriers — which most likely involve several million subscribers — surprised even some officials who have closely followed the growth of cell surveillance.

“I never expected it to be this massive,” said Representative Edward J. Markey, a Massachusetts Democrat who requested the reports from nine carriers, including AT&T, Sprint, T-Mobile and Verizon, in response to an article in April in The New York Times on law enforcement’s expanded use of cell tracking. Mr. Markey, who is the co-chairman of the Bipartisan Congressional Privacy Caucus, made the carriers’ responses available to The Times.

While the cell companies did not break down the types of law enforcement agencies collecting the data, they made clear that the widened cell surveillance cut across all levels of government — from run-of-the-mill street crimes handled by local police departments to financial crimes and intelligence investigations at the state and federal levels.

AT&T alone now responds to an average of more than 700 requests a day, with about 230 of them regarded as emergencies that do not require the normal court orders and subpoena. That is roughly triple the number it fielded in 2007, the company said. Law enforcement requests of all kinds have been rising among the other carriers as well, with annual increases of between 12 percent and 16 percent in the last five years. Sprint, which did not break down its figures in as much detail as other carriers, led all companies last year in reporting what amounted to at least 1,500 data requests on average a day.

With the rapid expansion of cell surveillance have come rising concerns — including among carriers — about what legal safeguards are in place to balance law enforcement agencies’ needs for quick data against the privacy rights of consumers.

Legal conflicts between those competing needs have flared before, but usually on national security matters. In 2006, phone companies that cooperated in the Bush administration’s secret program of eavesdropping on suspicious international communications without court warrants were sued, and ultimately were given immunity by Congress with the backing of the courts. The next year, the F.B.I. was widely criticized for improperly using emergency letters to the phone companies to gather records on thousands of phone numbers in counterterrorism investigations that did not involve emergencies.

Under federal law, the carriers said they generally required a search warrant, a court order or a formal subpoena to release information about a subscriber. But in cases that law enforcement officials deem an emergency, a less formal request is often enough. Moreover, rapid technological changes in cellphones have blurred the lines on what is legally required to get data — particularly the use of GPS systems to identify the location of phones.

As cell surveillance becomes a seemingly routine part of police work, Mr. Markey said in an interview that he worried that “digital dragnets” threatened to compromise the privacy of many customers. “There’s a real danger we’ve already crossed the line,” he said.

With the rising prevalence of cellphones, officials at all levels of law enforcement say cell tracking represents a powerful tool to find suspects, follow leads, identify associates and cull information on a wide range of crimes.

“At every crime scene, there’s some type of mobile device,” said Peter Modafferi, chief of detectives for the Rockland County district attorney’s office in New York, who also works on investigative policies and operations with the International Association of Chiefs of Police. The need for the police to exploit that technology “has grown tremendously, and it’s absolutely vital,” he said in an interview.

The surging use of cell surveillance was also reflected in the bills the wireless carriers reported sending to law enforcement agencies to cover their costs in some of the tracking operations. AT&T, for one, said it collected $8.3 million last year compared with $2.8 million in 2007, and other carriers reported similar increases in billings.