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Apple-Rogers falling out: A story too good to be true?

July 7, 2008: 9:09 AM ET

Daniel Smith, a Canadian sales and marketing consultant with an eclectic blog called Smithereens, posted on Saturday what he called "a very plausible rumour" about the launch at of Apple's iPhone 3G on the Rogers Communications network.

The gist of the post -- entitled "Apple Flips Rogers the Bird" -- was that Apple and Rogers, Canada's largest mobile carrier, have had a falling out over the negative publicity generated by Rogers' pricing plans for the new iPhone that goes on sale Friday morning. Rogers' plans require a three-year contract, have no unlimited data option and, compared with comparable AT&T (T) plans, offer a third of the calling time and half as many text messages. (See here for the petition for rate relief that has gathered more than 43,000 signatures and here for the Vancouver Sun editorial urging customers not to buy an iPhone.)

The net effect, Smith claims, is that "thousands" of Canadian part-time workers hired by Rogers have lost their jobs and untold numbers of iPhone 3Gs earmarked for Canada have been diverted to Apple's European partners.

On Friday, wrote Smith, "while the American giant slept, the Canadian telecom industry was a-buzz with information, albeit all of it internal and very hush-hush....

  • First, an employee of Apple Canada sends a text message to my source that says something to the effect of: "You guys are screwed for iPhone," but will not respond to multiple replies asking for clarification.
  • Next, an employee at competing handset manufacturer RIM (Blackberry's parent) (RIMM)¬†sends my source a text soon after saying there are rumours of an Apple-Rogers fallout.
  • Then, my source receives a call notifying him that all the part-time staff who had been hired for next week's launch have been fired without notice.
  • And finally, a senior Rogers rep confirms to my source that Apple has decided to divert a large percentage of their planned Canadian shipment to Europe and that each Rogers store may now be getting as few as 10-20 units. This is ostensibly due to Apple's displeasure over Rogers' high data and voice rates." (link)

Not surprisingly, given the passions surrounding the iPhone 3G release in Canada, Smith's "plausible rumour" soon took on a life of its own. By Monday it had risen to the first page on the Techmeme news aggregator and spawned more than a dozen secondary posts.

But none of the follow-ups have been able to provide independent confirmation of any details in Smith's story, and now Smith himself is backing away from some of his claims.

In a Sunday update he added this caveat: "Apparently, only certain dealerships took on additional staff for the launch, although most urban locations did. Also, some dealerships may not have let all their iPhone help go, but others definitely have. It's important to clarify that any decisions to let staff go were made at the individual dealer level, and not by Rogers corporate...at least not directly."

In a second update he replaced the phrase "ostensible due to Apple's displeasure" with "possibly due to Apple's displeasure" and added this:

"Although no per-store numbers can be confirmed, the verbiage used by head office is apparently that numbers will be "significantly reduced" and that stores should "exercise caution" not to over-promise. Europe has also been reconfirmed as the destination for the allegedly diverted units."

Finally, he showed up on The Mac Observers' Apple Finance Board to post what he called a "pre-emptive defence."

"This could be something as simple as a shipping or production delay that's been blown out of proportion. I haven't ruled that out. ... Something's definitely up, whether it is indeed an Apple power play is up for debate." (link)

Indeed.

Neither Apple (AAPL) nor Rogers (RCI) have commented on the rumors.

UPDATE: In a private message, Smith says his estimate of "thousands" of temps laid off by Rogers, which he posted in an online forum, was an extrapolation, and that on reflection "hundreds" is probably more like it. "I misspoke in that forum entry and I apologize," he writes. "It is unfortunate because the intent of the story was not to spread untruths, and I have been trying to clarify and add to the conversation as much as possible to avoid doing so."

UPDATE 2: AppleInsider's Kasper Jade reported on Tuesday that Apple, "disgusted with Rogers Wireless," has decided that that Apple's Canadian retail stores -- there are six in all -- will not be selling the iPhone 3G on July 11, as previously planned. Jade says that although most of the Canadian stores he contacted were not sure whether they would be selling the phone, "one representative ultimately confirmed that Rogers and its partner stores will be the only place to buy iPhone 3G come Friday." The Canadian Apple Stores we called Tuesday morning could not confirm AppleInsider's report, and later that day CNet's Tom Krazit reported that none of the Apple stores outside the U.S. will be selling iPhones this week.

UPDATE 3: In a last-minute concession, Rogers on Wednesday offered a special 6GB data plan for 30 Canadian dollars ($29.76) a month. It will be available to customers who activate by August 31 on a three-year contract and can be added to any voice plans currently available. (link) It's not clear how many of the 57,000 who signed the original rate-relief petition will be satisfied. Rogers is betting that most will; it is opening its stores early on Friday and limiting purchases to 2 iPhones per customer. But a new petition drive has already been started under the banner: Rogers its (sic) not enough.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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