Apple's New iPad Faces Snags Outside U.S.
Apple's New iPad Faces 4G Snags Outside U.S. - WSJ.com
MELBOURNE, Australia�Apple Inc.'s AAPL +0.06% new iPad faced rising complaints in several countries that it was incompatible with fast fourth-generation cellular networks outside North America.
In Australia, the company agreed to tell consumers more clearly about the tablet computer's capabilities and will head back to court in a fight to retain the iPad's 4G branding. Meanwhile, Sweden's consumer watchdog is considering whether to start an investigation into whether the labeling is misleading.
The issue arises because the frequency bands allocated to run next-generation 4G networks differ from country to country. Apple on its website says, "4G LTE is supported only on AT&T and Verizon networks in the U.S. and on Bell, Rogers, and Telus networks in Canada."
The third version of the iPad went on sale early this month. The Cupertino, Calif., company said it has been its strongest iPad rollout, selling more than three million units world-wide.
Apple on Wednesday reached an agreement with the Australian Competition & Consumer Commission to clarify the new iPad's 4G compatibility and will offer to refund early purchasers who believed they had been misled about the iPad's capabilities in the country. Apple lawyers said in Australia Federal Court that the company would take steps to ensure that consumers didn't buy the new iPad mistakenly believing it could connect to Telstra Corp.'s fastest wireless network, which differs from the 4G networks rolled out in the U.S. and Canada.
Customers lining up outside an Apple store in Sydney on March 16, 2012, to get their hands on the latest iPad.
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Colin Golvan, a lawyer for the commission, which initiated the court proceedings, said the watchdog ultimately wants Apple to stop selling the product as "iPad Wi-Fi + 4G."
The case has been closely watched in other markets where the iPad is on sale.
In Sweden, one of the few countries in Europe with extensive 4G coverage, the new iPad won't function on 4G networks. The tablet supports the long-term evolution protocol on the 700-megahertz and 2100-megahertz frequencies. But in Sweden, the 700-megahertz band is used for television broadcasts, and the 2100-megahertz band is used for third-generation data traffic. It is unlikely that either will be repurposed for other uses.
Marek Andersson, a lawyer at the Swedish Consumer Agency, said it has received several complaints from consumers over marketing that touts the new iPad as having 4G connectivity. He said the agency is considering starting an investigation.
"One may rightfully ask if the marketing of the new iPad is misleading," Mr. Andersson said. "The question is whether this information is clear enough in Apple's marketing."
The new iPad also is incompatible with 4G networks in Germany, where telecom operators have started to roll out LTE mobile networks in earnest. Consumer organizations said they weren't aware of complaints, however. Apple in Germany declined to say whether the incompatibility had affected sales.
Fourth-generation coverage hasn't rolled out in France, Spain and the U.K., but other regions are affected.
Matthew Wilsher, chief marketing officer for Emirates Telecommunications Corp., said it is "difficult and disappointing" that the new iPad is incompatible with the 4G network in the Mideast. The company, commonly known as Etisalat, in September began 4G services in the United Arab Emirates' major cities. "I'm sure that in the future there will be [Apple] models that have LTE version that works on our LTE network," Mr. Willsher said.
Apple hasn't released the latest iPad in the Mideast, but retailers in the U.A.E. have said gray-market sales have been robust.
In Australia, Judge Mordecai Bromberg set a hearing for May 2. He ordered that Apple add a disclaimer in its stores and on its Australian websites saying: "This product supports very fast cellular networks. It is not compatible with current Australian 4G LTE networks and Wi-Max networks." Apple also will provide displays for third-party stores, email the clarification to customers and offer a refund for anyone in Australia who bought the new iPad 4G before March 28.
The trial is likely to center on whether consumers could have been expected to know that the new iPad wouldn't work on Australia's 4G networks.
"It will be contested by Apple there are in Australia networks that, according to international definitions, are 4G�are properly described as 4G," Apple senior council Paul Anastassiou told the court. "Can you mislead a consumer with a statement that is technically accurate?" Apple said it didn't anticipate that many customers would seek to return their iPads.
Australia's competition commission had wanted Apple to place a sticker on its iPad packaging saying the device is "not compatible with current Australia 4G networks." Apple rejected that request.
Telstra said it has been careful to ensure that customers understand that the new iPad doesn't run on its 4G LTE network in Australia.
In Japan, Softbank Corp. is the only company offering the new iPad, and the company doesn't offer 4G service. Softbank said the company tells customers who purchase the 4G model that they will be using it on a 3G network.