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O2: British businesses may block iPhone usage

Mobile operator says it's happy to transfer phone numbers to Apple's new handset but that businesses may impose tougher rules.

The director in charge of the iPhone for O2 has warned that employers may not let their workers use Apple's hotly anticipated handset as a business device.

Speaking to ZDNet UK ahead of Friday's U.K. launch of the iPhone, Steve Alder said workers looking to use an iPhone within a corporate environment might come up against resistance from their internal procurement teams because the device is available only with a consumer service contract.

O2 has what Alder described as a "multiyear" exclusivity deal with Apple for U.K. users, though the operator refuses to divulge the exact length of the deal or the percentage of revenue going to Apple.

"We do want to keep it clear that this is a consumer launch on a consumer tariff," Alder said. "Our advice is: if you're in business, it's probably best to check the policy within your company because it may not be possible to transfer your number from your business contract to the iPhone."

However, Alder said that if a business customer requested it, O2 would transfer the number. "There are people in business attracted by the iPhone," he added.

Asked for his opinion on the announcement that Google and dozens of other companies would be working toward a rival cellular platform, the Linux-based Android, Alder said he would welcome any initiative to improve customers' mobile Web-surfing experience. "If Google can do for mobiles what it has done for the Internet, that has to be a good thing," he said.

The iPhone has been criticized for the fact that it runs on a mobile-data technology called EDGE (Enhanced Data for GSM Environment), rather than on the faster 3G standard. Alder claimed on Friday that the vast majority of O2's customers were still using GPRS--General Packet Radio Service, a slower alternative to 3G--and that "3G offers lots of benefits for the future, but not the mass market at the moment."

O2, like all the other U.K. operators, has spent billions of dollars on its 3G network over the last half a decade.

O2's EDGE network will cover only 30 percent to 40 percent of the U.K. population by the end of this year, so when the iPhone is used in other areas, coverage will fall back to GPRS.

An alternative for users is Wi-Fi: O2 has a deal with hot-spot aggregator The Cloud for connectivity. Alder claimed that Wi-Fi coverage is now ubiquitous enough to provide connectivity to users unable to get a satisfactory experience on the cellular network.

"We want to be very open with people. If they ring up our customer service team, they can inquire, for their local area, what the EDGE coverage is," Alder said. "But 30 percent of homes have Wi-Fi. Work has Wi-Fi. Two out of three so-called Internet experiences are going to be over Wi-Fi because people know where those hot spots are."

Alder added that he is happy with onto one network in each country. Apple issues regular firmware updates to the handsets to gradually roll out new functionality and patch previous attempts to decouple the handset from its designated network.

The first iPhones in the United Kingdom will carry version 1.12 of the device's firmware, which will nullify the so-called "jailbreak" method that has been used by individuals wanting to use U.S. iPhones outside of the States.

"Apple is clearly on top of those issues," Alder said. "But we would ask: why do people want to unlock their iPhones? We are offering a very good package with unlimited data and visual voice mail. If you choose to unlock it, you are not going to get those benefits."

Although the iPhone is targeted at consumers, it is expected that many of the devices will find their way into businesses, as workers bring their personal handsets to work. The security implications of this are yet to be felt, though some have claimed that Google's plans for Android may provide greater security.

David Meyer of ZDNet UK reported from London.