It's often posited but thus far it's an option that Apple has failed to take up - why doesn't it become a mobile virtual network operator and entice its fanbois to sign up. This would give Apple full control of the customer experience, something it's always keen to extend? The difference now may be the iPad. By Ian Scales.
Debated wherever telecoms people gather - usually in the pub after an industry event rather than part of the event proceedings: Why doesn't Apple launch its own MVNO and sell service as an app? It would then have greater control over the entire customer experience, would gain the ability to design tariffs to match what it knows and understands about Apple users' behaviour; and it would win another monetisation point.
Yes, running networks is a complicated business and Apple doesn't have the reach or expertise to do that. But the MVNO (or white label solution, if you prefer) is the vehicle for that and it can be introduced territory-by-territory where it makes sense. It's designed to get premium branding and superior customer relationships to the front-of-house where they can be charged at a premium, while all the heavy lifting is done by a wholesale telco behind the scenes.
Ah... but the carriers would never wear it, comes the usual reply. This sort of relationship reduces their role to that of dumb pipe and it's something they're desperate to avoid, especially since they lost so much control over the smartphone market after the launch of the iPhone. Not going to happen.
That analysis was hotly disputed recently in an address to the Informa MVNO Industry Summit in Barcelona, by wireless industry strategist Whitey Bluestein. According to Bluestein (great name, by the way) it's an obvious next move for Apple and one it's been mulling for years. He says it's a question of 'when' not if'.
As proof Bernstein points to the patent Apple took out way back in 2006 (just pre iPhone) for 'Dynamic Carrier Selection'. The idea was for a dynamic MVNO or wholesale arrangement with Apple connected to multiple carriers and then offering access on to users according to best quality/best price and so on over time.
Apple didn't take this plan forward, no doubt partly because its initial soundings would have been greeted with horror by the carriers, but also because in 2006 the US was still a 2G world with both CDMA and GSM fighting it out.
Bluestein says Apple now has the clout to strike wholesale deals with several mobile operators and points out that even the mighty AT&T capitulated to Apple’s terms to become the first iPhone carrier six years ago. It can pull a similar stroke again because "any reluctance on the carrier’s part to offer Apple a sweetheart wholesale deal would be outweighed by the huge business opportunity presented. It’s a classic case of “The Prisoner’s Dilemma.” The carrier’s biggest fear is that if it says “no”, the business and growth would go to a competing carrier and it would be kicked the curb," Bluestein writes in a follow-up article for GigaOm.
Bluestein also points out that Apple has been clashing recently with much of the rest of the industry over the introduction of a nano-SIM whose arrival he says would pave the way for a 'virtual' SIM and the ability to do the remote activation that Apple would need if its 'dynamic carrier selection' approach were to work.
So this time, will Apple go MVNO? It seems to me that two important things have changed to make the move more attractive to it now and in the future.
LTE and IP end-to-end.
The technology Apple really loves is WiFi. An Apple service could most likely adopt a real hetnet approach with WiFi retaining and extending its heavy lifting role with LTE seamlessly mopping up in the gaps.
As things currently stand the vast majority (the stats seem to vary) of tablets of all kinds (including iPads) don't have cellular and even if they do, users tend not to go for the costly cell option when their built-in WiFi will just about do. However that doesn't mean they can't be tempted to take on cell as an alternative when required (like the beer, it reaches the parts other networks can't) if the right costs were presented to them.... perhaps by Apple itself on an innovative tariff?
Whitey Bluestein is certain it will come and he's mapped out a compelling set of steps.
"I see a gradual roll-out. First, they [Apple] will bundle iPads with data plans from wholesale agreements, much like Kindle includes “free, always-connected 3G wireless” with three of their e-readers. Then Apple will offer data plans and international roaming plans through iTunes. And finally, they will negotiate the wholesale deals to bundle iPhones with voice, data, messaging and roaming as a virtual provider. Will they go global? Not all at once. They would start in markets where they could get good wholesale pricing."
Have your say in the box below. My opening bid is...
please sign in to rate this article