Is Apple Running a Scam Down Under?

Apple (Nasdaq: AAPL  ) has taken a little flak lately over marketing. Earlier this month, a New Yorker sued the Mac maker, alleging that Siri is a scam and that Apple's expensive marketing campaigns are just plain false advertising.

Cupertino is now on the receiving end of some additional scrutiny from down under. The new iPad is seeing an aggressive global rollout, but Australia was one of the lucky countries to be included in the first batch of launches.

The new iPad is the first Apple device to feature 4G LTE, which is significantly faster than the 3G data speeds. However, there's a little bit of a catch. It's compatible only with LTE networks in North America running on 700 and 2100 MHz frequency bands. Marketing chief Phil Schiller outlined the carriers that supported LTE on the iPad, including AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) domestically and three other carriers for our neighbors to the North.

Verizon has a few advantages stateside over AT&T with broader LTE coverage and hotspot support.

Source: Apple.com.

Source: Apple.com.

Australian regulators are starting to get a little worked up over Apple's marketing the device as 4G, since it doesn't work with Australian 4G networks. The Australian Competition and Consumer Commission is pursuing Cupertino for various concessions, which could go as far as a sales injunction -- though it probably won't go this far.

When repair shop iFixit got its skilled hands on an Australian unit for one of the first teardowns, it noticed this little sticker.

Source: iFixit.com.

Source: iFixit.com.

For example, Australian carrier Telstra's LTE uses 850 and 1800 MHz bands, so the 4G speeds are lost on locals. Telstra has said it's been trying to make sure that buyers are aware that the iPad won't work on its 4G network.

Apple has now agreed to offer more prominent disclaimers that the iPad won't work on Australian 4G networks, and it's also extending refunds to disgruntled buyers who felt misled by its marketing.

But wait -- there's more!
It's not over yet, as other countries around the world are heading down the same road. The Swedish Consumer Agency is contemplating an investigation for the same reason, and the UK's Advertising Standards Authority has taken note.

Seems like Apple will need to tweak its marketing to avoid more hot water. It also wouldn't hurt to add more fine print. Just what the world needs: more fine print.

Source: Apple Online Store (Australia).

Source: Apple Online Store (Australia).

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Fool contributor Evan Niu owns shares of Verizon Communications, Apple, and AT&T, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On March 30, 2012, at 9:14 AM, Melci wrote:

    The iPad 4G does work on 4G frequencies and at 4G speeds in Australia.

    The International Telecommunications Union (ITU) defines "4G" to include:

    - LTE (Long Term Evolution) 

    - WiMax 

    - HSPA+ dual carrier

    Vivid Wireless advertises their WiMax service topping out at 4-5mbps around Australia as 4G.

    Telstra advertises their HSPA+ dual carrier service which is capable of running at speeds up to 42mps as 4G (as per the ITU). Already users are reporting real-world speeds of up to 20 Mbps in Sydney besting Vivid Wireless's 4G speeds by a factor of 4.

    At the moment, Telstra's LTE service is giving faster speeds, but just wait till the number of users increases to the number on the HSPA frequencies and you will see those speeds drop as LTE, just like HSPA and WiMax users all share the same bandwidth to their local tower. In the USA, tests of 4G in New York top out at 20mbps - the same as what Tesltra HSPA+ dual carrier achieves in the real world here in Australia.

    The iPad 4G is indeed 4G in Australia

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