Your competitors giving away their product means your product is not worth anything? That seems like nonsense to me. Maybe your competitors are unable to compete on the worthiness of their product which is why they are forced to give it away.
Bingo. I doubt the Open Handset Alliance would've gotten off the ground had they charged the kind of licensing fees common at the time by Symbian and Windows Mobile. What would convince manufacturers to pay into an (at the time) remarkably immature platform and gamble their devices' success on it?
But make it free… and now you've suddenly got their attention.
And the point of their competitors not charging for the OS API is that it demonstrates that the market value of the iOS API is $0.