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Apple Becoming a Wireless Carrier?

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Bloomberg claims that Apple will be its own carrier for the upcoming iPhone.

I think that if Bloomberg is right, it would be a really great thing for customers.

Signing a contract with a wireless carrier today is a complete mess for the customer. There are way to many plans to choose from, and each one is ridiculously complicated. On top of that, a plan that is advertised at $40/month really turns out to cost around $70/month, due to taxes and fees that are all hidden in the fine print when you sign a contract.

If Apple was the carrier for the iPhone, I’m sure they would make the whole process a delightful experience for the customer, and be very up-front about any hidden fees, as they are with everything.

However, I must say that I find it very unlikely that Apple would make this move. It would be a ton of extra work for Apple.

Bloomberg says that Apple would be a “mobile virtual network operator,” or MVNO, which means that it would use network infrastructure (cell towers, wiring, etc.) that is owned and operated by another company (Bloomberg suggests Cingular). This would save Apple the trouble of having to build towers, which, of course, would be an insane undertaking that I don’t think anyone thinks Apple would do. But even if Apple would be an MVNO, it would still have to operate the dealings with end-users, such as managing plans and contracts. This could become a huge headache for Apple, and it just doesn’t seem like the kind of thing Apple is interested in.

Apple becoming a wireless carrier seems just as awesome, but just as unlikely, as Apple becoming its own record label.

What do you think? Would Apple being the carrier make you more likely to purchase an iPhone?

18 Responses to “Apple Becoming a Wireless Carrier?”

  1. i think launching a totally new service is TOO risky, even for apple… even people who would love to hop on board most likely will have to wait because of their present cellular contracts… the turnover to free-up customers “from the chains of their present cellular service” would take too long for apple to make money… BUT, if they managed to keep their own cell service up and running for at least two years, the potential profits could be huge!!! I think that apple will released an unlocked cell phone (which the carriers wont care about because they usually lose money on handset sales)… i wish good luck to apple!!!

  2. Julian: I think that at the very least Apple would dedicate a Bar or Boothe in the Apple stores which would have to be completely re-organized to compensate for the increased traffic. There does not seem to be enough room in Apple stores that I’ve visited.

  3. In Europe, the 3G networks are allegedly hopelessly underutilised and a great disappointment. Assuming this is also the case in the US, wouldn’t Apple’s foray into this specific area allow them some sort of diversification advantage over other carriers who have yet to come with a viable strategy there?

    Just my 2 cents…

  4. No they won’t, just as they haven’t become a music corporation or television producer. If they would start selling wireless contracts they only would be a reseller, just like they are with the music in iTunes. However I don’t even think they will sell wireless contracts. Instead, I think an iPhone will just be the next iteration of the iPod like I wrote here:

  5. Where, physically, would an Apple MVNO locate? In the Apple stores? Separate lots? If they were going to become an MVNO there would have to be some mysterious physical evidence like when the Apple stores are being bulit. Somewhere to house the inevitable tirade of disgruntled users. I do think that if anyone can streamline the misery of ownning/using a mobile it would be Apple. I would pay a huge premium for a mobile and service “that just works”. Apples penchant for just working makes me believe that initially they will just sell unlocked phones.

  6. Domenico Bettinelli

    I hope that they just sell it as an unlocked multi-band phone so I could drop in my SIM chip and continue using it with my current carrier and plan. It’s not that I particularly enjoy Cingular, but I have a family plan and 18 months to go on my contract, which would mean dealing with breaking the contract, paying the fine, getting not one but three new phones.

    Really, just give me a phone. In fact, I wish everybody did it that way. Tying the hardware to the network and service is an obnoxious trend that I wish had never happened.

  7. MisterKen

    I’ve been wondering for a long time why Apple has been loading the war chest with cash (between 8 – 10 billion.). A move like this would be dramatic enough and need that kind of liquid capital.

    Disney has started their own cell service (who sits on their board?…oh yeah…) with questionable success. Industry insiders say that the costs of piggy-backing your service onto existing networks virtually gaurentees that your service will cost more. To offset this Disney offers a host of ‘extras’ related to their content. Even with that, they’ve had marginal success.

    Apple could do the same leveraging iTunes and the iPod.
    I would definatly consider it. Cost would be a huge factor and the quality of servic in my area. I’d love a mac compatable phone but if I can’t make calls on it, forget about it.

  8. Andy: I’m not saying Apple wouldn’t make you pay the government fees, I just think they’d be upfront about them.

    As to Cingular never allowing anyone to use their network, well, you wouldn’t think a lot of TV stations would be selling their shows for 2 bucks, but they do it for Apple. Same with the iTunes Store.

    Although I still do think it is very unlikely that Apple is going to make this move.

  9. I worked for Cingular for a pretty long time and I can assure you there is no way Apple would do this. A lot of those “hidden” fees are actually government imposed and there is no way around them unless you take it up with the “man.” Also, as far as I know, Cingular hasn’t allowed anyone to use their network except Cingular. Which means Apple would have to partner with another wireless provider and if they did that it would discourage me from buying the iPhone altogether. Plus, just the amount of calls we would receive each day at our call center was astonishing. We had a call center in all major markets handling specific areas of the country. You think Apple wants to have to do that? I like the idea of Apple designing the cool products and then letting the unimaginative dogs handle the support for the actual wireless service. I call for a separation of phone and provider!

  10. I just don’t think that Apple would not want to take on all the problems and issues that go along with being a wireless provider, even being an MVNO. I work at a Best Buy and the MVNO carriers we have like Virgin, Amp’d, and Boost don’t sell very well at all mostly because people are so confused as to how they operate. That being said, if Apple were to be post-paid (meaning monthly), instead of prepaid like those other three it might work out possibly.

  11. Even if Apple were to get into this market, you have to remember that there are trade-offs. What would be a $40 plan at the other carriers would be a $60 plan at Apple to help pay for the design and that delightful experience.

  12. VOCE is $200/month.
    And that’s after a $500 activation fee.

    It’d be great if Apple could offer a monthly all-inclusive plan, but if profit margins require the cost to be even half that, not a chance.

  13. R. Olding

    How ’bout this scenario… No contracts, no sign up fee, no hidden charges. Just purchase the phone and pay a single monthly fee, talk as much as you want to anyone, anywhere in the world. Looking at Apple’s product release history, it will be the USA at first, but in two to four years, THE WORLD!

    The are already a number of phone companies that operate using this business plan, VOCE is one.

    The usual suspects in the cell phone market are all about paying the middle man, the sales-person). That’s why there are contracts, if a sales-person can guarantee a customer for x amount of time, the sales-person receives a commission. the more contracts a sales-person sells, the higher their commission. Eliminate the middleman and there’s no need for a contract.

    Apple is a retail-sales based company, not a commission based sales company. Sell the product, make it work well, , update it once every 18 months, keep the customer happy and they’ll come back for more.

  14. No way that Apple makes this move, it is assinine on their part to lock out millions upon millions of customers. Two year contracts, business contract, family contracts, service issues, coverage issues, plan issues, won’t work, can’t work, ESPN already proved it. ESPN content is great, but who wants to switch carriers to get it, not enough people, thus it didn’t work. I am an Apple addict to the extreme, I will snatch up an iPhone device the moment it is available, as long as it is unlocked. If it is provider locked, I will be out, unless it is Cingular. But there is no way Apple makes this move because of the alienation of its customers. The sales difference between an iPhone that is unlocked and an iPhone with Apple service or another provider’s is astronomical.