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iPhone mules are taking our handsets, damnit!

Johnny Foreigner fuels UK iPhone shortage

Internet Security Threat Report 2014

Thirty years ago, I met a Frenchman who lived in Kent and was on the dole. He had to sign on every two weeks. He was also registered as unemployed in France, where he signed on once a month.

So each month he would cross the ferry in his van, laden with... upright pianos. As you already know, pianos were much popular in Victorian and early 20th Century Britain than in France, and so secondhand supply was plentiful and cheap. Unlike France.

Where was I? Ah yes, here is an example of an enterprising young fella, who played the system in both countries and seized upon a cross-country arbitrage opportunity. Just like the Brits used to descend on Calais for cheap booze and fags and washing powder.

In the early days of mass-market PAYG mobile phones, foreigners, mostly French, would swoop on British supermarkets and buy cellco-subsidised phones by the dozen to sell on in their own country.

This left the operators nursing losses as they were unable to offset the handset subsidy against call revenues. Soon enough, the market was extinguished with the introduction of "locked" pre-paid phones.

This brings us to one of the sillier claims of the week: how Eastern European traders are fuelling iPhone 4 shortages in the UK, thus "depriving ordinary customers of getting their hands on them".

Stand in line

The story from the Daily Mail, is that an unlocked iPhone costs twice as much in Eastern Europe, the Middle East and Africa than in the UK.

So brokers are exploiting this arbitrage opportunity, sometimes by paying runners in their hundreds to queue up outside an Apple Store. For this, the mules are paid up to £70 a pop.

Apple told the Mail that it would "prefer not to engage" with this story, so let us try instead.

UK punters could always get their iPhone fix from an operator - but that typically means an expensive 18-month or two-year contract. Or they can get up earlier and stand in line. Or they can wait a few weeks before all the fuss dies down. More iPhone 4s will fly out the factories and grey market prices will come down abroad, reducing the arbitrage opportunity.

In due course, Apple will roll out the iPhone with cellcos in more countries and the price differential will disappear. In the meantime, a lot of people in Britain are making some or a lot of money from Johnny Foreigner - and let's not forget Apple and its UK retail staff are quids in too. Where is the harm?

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