Six years ago, before the release of the first iPhone, many were shocked to hear that Apple was able to dictate exclusivity terms to telecom giant AT&T. The prevailing thought was: struggling carriers deal, giants don’t. Of course we all know the story that followed, as AT&T was able to ride iPhone exclusivity to huge profits.
The by-product of that story, however, is that wireless carriers now have a difficult time saying no to Apple, given that the Cupertino company produces the world’s most popular smartphone and tablet. In fact, often times it seems that Apple has most carriers over a barrel, demanding almost punitive subsidies from the carriers in exchange for the chance to lure subscribers into long term contracts with the iPhone or iPad.
But according to GigaOM blogger and strategic advisor, Whitey Bluestein, Apple may be about to test the bounds of its domineering relationship with wireless carriers, looking to become a mobile carrier itself, selling data packages and international roaming deals bundled with both the iPhone and iPad. Will wireless carriers resist Apple becoming a direct competitor, or simply knuckle-under to maintain access to the company’s beloved line-up of products?
Apple’s strategic plan, according to Bluestein, will proceed as follows: “First, Apple will sell data packages bundled with iPads. Then it will sell data and international roaming plans to iPhone customers through the iTunes Store. And in time — sooner than many think — Apple will strike wholesale deals with several mobile operators so that Apple can provide wireless service directly to its customers, as Apple Mobile.”
While many may question whether any wireless carriers will play ball with Apple or even whether Apple would ever consider such a move, consider again its exclusivity deal with AT&T. The agreement rocked the telecom world simply for the fact that it completely redefined the carrier-handset vendor relationship, with Apple assuming more control and more power than any other handset vendor before it. Now Apple is confident it will be able to redefine the boundaries between a vendor and a carrier as well.
So what basis does Bluestein have for this sort of speculation? First, before the release of the first iPhone Apple filed for a patent for “Dynamic Carrier Selection” “The diagram in the patent application,” Bluestein explains, “portrayed Apple as the wireless service provider connecting to multiple carriers.” Apple, using its considerable leverage, would strike wholesale deals with carriers, allowing Apple customers to choose the device, plan, and carrier all through Apple’s iTunes. While some may think that Apple has since lost interest in this, the patent was recently renewed, offering tantalizing insight into Apple’s future plans.
Second, Apple has shown significant interest in nano-SIM cards for LTE handsets, technology that could potentially allow Apple to bypass carriers altogether, activating new handsets through iTunes.
Finally, Apple has all the components it needs to become a mobile carrier, with legions of dedicated fans, the most sought after devices, and an established retail presence as well.
Truth be told, given Apple’s patent filings, its current market dominance, and its constant desire for in-house control over all revenue streams, it certainly wouldn’t come as a surprise to hear that Apple is already in talks with mobile operators over such an arrangement, or even to hear that carriers themselves may be initiating the discussion.
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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.
