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Apple’s App Store Turning Carriers Into Dumb Pipes

imageAre mobile carriers destined to be traffic cops rather than content and services companies? The WSJ has a piece arguing that — thanks to Apple (NSDQ: AAPL) — “consumers have changed the way they think about their cellphones. It’s no longer just about good reception or even the snazziest design; people care more about playing games, accessing Facebook or lighting up a virtual lightsaber on their device”. That favors developers and tech companies over telcos, especially since Apple runs its App Store in a closed environment, not sharing the revenue with AT&T (NYSE: T). Since the average monthly phone bill for an iPhone user is $95.34 and the average bill for other users is $59.59 AT&T probably isn’t too worried about this. Of course, Apple is just the queen bee — Nokia (NYSE: NOK), RIM (NSDQ: RIMM), Google (NSDQ: GOOG), pretty much all handset manufacturers are keen to get into selling software…Nokia especially has seen the writing on the wall for the handset business for several years now.

The good news for carriers is that they have several advantages which should allow them a nice slice of the content and services pie, if they use them sensibly. One advantage is more accurate user data: “AT&T’s TeleNav, for example, is much more accurate than Google Maps because it relies on its own data, where Google Maps attempts to calculate the position based on nearby cellular towers. In order to access that data, developers have to work with carriers,” the WSJ reports. Some in the industry think carriers should concentrate more on providing valuable data and services to content providers rather than focusing on consumers. They also have a strong influence on which devices are in the marketplace. However, they are a lot slower: “Where tech companies like Google can move in days, a similar decision takes months or years for a large carrier. But once they do move, they can employ larger resources.”

4 Responses to “Apple’s App Store Turning Carriers Into Dumb Pipes”

  1. Carriers should just open up their own app stores, allow any developer to publish, and take 30%. Problem solved for the entire industry. The best part for the carrier is that they will make way MORE money with HIGHER margins this way. Unfortunately common sense isn't that common at all.

  2. The carriers aren't just slow — they purposefully discriminate in favor of their own services (i.e. dictating what is in an OEMs hardware/firmware) and out of their own self-interest. The Telenav quote is completely idiotic.

    Carriers ARE dumb pipes, and being a dumb pipe is a fine utility to provide to society. Don't let greed and self-interest mask the truth!