I am not a fan of conspiracy theories, but a few months ago the pieces of a mobile industry puzzle started to fall into place. They’re subtle, but if I’m right Apple is poised to deliver a hammer blow that the mobile industry never saw coming. Am I crazy, or ahead of the curve? Follow my train of thought and decide for yourself.
Table of contents
Click on any of the following to skip straight to that section.
- The first hint at a masterplan
- Tension between Apple and the networks
- Buy your airtime from Apple
- The technology to make it happen
- The bargaining chips are all Apple’s
It all started with Apple’s one network policy. When AT&T scored the exclusive rights to the iPhone, it set a precedent, but it might also have sealed the network’s fate.
The American super-network was the exclusive carrier of the iPhone for over three years. There was a palpable sense of pride from the operator’s executives, as well as a tangible frustration from Apple.
Steve Jobs himself had trouble getting the first iPhones connected to AT&T, and it was clear early on that Apple was dissatisfied with the experience iPhone owners had. But they stuck with their policy of awarding the iPhone to exclusive mobile carriers for each country it launched in. And I believe it was the beginning of a lengthy plan to blindside everyone involved.
Over the coming years, Apple would gradually loosen the reigns on the iPhone. More networks would be allowed to stock Apple’s baby on their shelves, and the queue of operators waiting to place orders was long.
In the UK, every mobile network now has Apple’s jesusphone on their roster. They clamoured to be in that position, from the mighty O2 and Vodafone, to the also-ran Virgin Mobile. But what began as an exclusive competitive advantage is now a commercial necessity.
Where once a network was privileged to range the iPhone, now it is a mark of shame if it does not. This too, if my theory is correct, lays the groundwork for a master stroke of industry hoodwinkery.
Make no mistake: even with its device on a choice of networks, Apple still isn’t flushed with joy when it comes to customer experience. Calls still drop, signal still dips and speeds still stutter, and Apple is not a company to suffer a poor customer experience gladly.
The first hint at a masterplan
The first hint of a change in the air came with Apple’s unveiling of iOS5. Along with it came iMessage, and the networks were dumbfounded. Without warning, Apple had diverted iPhone owners’ messages away from the networks’ SMS systems, and routed them through its own servers.
iMessage would, assuming both the sender and recipient were online, handle text, photo and even video messages. Coupled with the earlier addition of FaceTime video calling, it’s clear Apple wants complete end-to-end control of iPhone owners’ communications.
And why not? The result for customers is fantastic. iMessage has been lauded by almost every reviewer: It’s seamless, requiring no set-up by the user, it’s faster than SMS, free, supports higher resolution video attachments, and uses SMS as a backup solution in case the worst should happen and one of the parties dips offline, or Apple’s systems fail to cope.
A long-held tension with mobile networks
It will come as no surprise to Apple-watchers that Cupertino has taken steps to limit the iPhone’s dependency on mobile networks. The company has held mobile networks in distain for a long time.
Speaking at the D8 conference last year, Steve Jobs said of AT&T: “things get worse before they get better… If you believe that, things should be getting a lot better soon!”
And they did get better, but not because of a single network. Apple eventually sold the iPhone on all the major networks, wheeling out versions of the iPhone 4 to work on GSM and CDMA networks such as Verizon, followed by the iPhone 4S: a phone designed to work on all networks – Apple’s first true World Phone.
Those incremental improvements propelled the iPhone to the point it is at now. As we covered earlier: a network without the iPhone is now the odd one out. But the iPhone experience still isn’t perfect. Signals still dip, network congestion still squeezes iPhone connection speeds, and in some areas you’ll struggle to make a call at all, if you’re on the wrong network.
But what if an iPhone could use all the networks, at once? I’ve been putting the pieces together, and it seems like Apple could be poised to pull off a truly world-beating mobile manoeuvre.
Buy your airtime from Apple
Apple has already offered iPhone owners the option of choosing their tariff after buying the device. The very first iPhone offered the option to sign up for an AT&T or O2 account from within iTunes, letting customers specify their monthly text and call allowance, and compare deals within Apple’s jukebox software. Tech guru Dave Taylor has some detailed screenshots of the process.
The option was eventually scrapped, but it has always left me wondering: Does Apple want to hoover up money for referring customers to networks? It’s a healthy business model, Just ask Phones4U or the Carphone Warehouse. But I doubt Apple needs the money, or wants the hassle. I suspect it has a bigger plan in mind.
Why refer your customers to a mobile network, when you could be the mobile network?
Rumours of Apple becoming a Mobile Virtual Network Operator (MVNO) have kicked around since before the original iPhone launch. As early as 2005, Forbes was speculating that Apple would shun all the networks and create its own service using airtime bought from a mobile partner and re-branded as Apple’s.
What’s more, Steve Jobs’ own biography suggests he was toying with the idea of creating a faster Apple network using Wi-Fi spectrum.
In the end, it all came to nothing, perhaps because Apple had thought of a better plan: Playing networks off against each other to make Apple the strongest “carrier” around. This, I believe, is what Apple has planned.
While traditional MVNOs buy their airtime in bulk from a single network partner and offer it at a discount to their customers Apple is in a position to buy airtime from all the networks, offering iPhone owners access to any network to make a call.
Imagine an iPhone that checks to see which network is least congested in your area before placing the call for maximum reliability, or the ability to hop between networks to get the best data speeds. Or how about an iPhone which looks for the cheapest network with availability before placing a call, letting Apple buy airtime at cheaper rates and pass the savings on to iPhone owners.
Sounds like a dream come true, doesn’t it? And it gets better. If Apple could secure airtime supply from networks worldwide, you could roam to other countries and never incur extra fees. Apple would simply be able to serve you as if you were a local customer. If Cupertino was feeling generous, it could allow free calls between iPhones too, just like it allows free iMessages.
And another benefit? The quality of a network would be judged on a cell-by-cell basis. If one network is under-performing in London, Apple’s system would effectively penalise it by choosing all others above it, until the infrastructure was improved.
That’s not just good for Apple, or iPhone owners, but good for the entire industry. It has the potential to be hugely democratic, and force mobile operators to focus on improving their core offering: A speedy network, with plenty of capacity and maximum coverage.
Want more evidence? Apple has recently begun offering the iPhone on some of the world’s smallest mobile providers. At the time of writing, C Spire is one of the most recent additions to Apple’s roster. It only has around 900,000 customers (compared to AT&T’s 100 million customers) but its addition could also mean Apple’s lining up every network to take part in a world-wide network share.
In fact, at a regional level, smaller networks could leapfrog national carriers in the performance stakes, scooping iPhone traffic, and therefore cash from under their noses. It wouldn’t be the first time Cupertino’s finest have upended industry convention.
And if Apple can pull it off, it would allow the iPhone to be advertised as the only phone with 100% coverage. How’s that for tempting?
The technology to make it happen
Apple has already begun patenting the technology required to position the iPhone as above and beyond the reach of any single carrier. Its latest patent explains how the quality or price of a network could be determined on a user-by-user basis, letting the iPhone pick its way to the best service at the lowest price.
And while some of the tech press have been distracted by talk of Apple patenting hardware designs for phones that lack SIM cards altogether, could its patents also let an iPhone download network settings to switch to a carrier only recently added to Apple’s cabal?
It’s worth chewing over. The plans are there in black and white, and for the first time ever, Apple has enough leverage to usurp mobile operators altogether.
The bargaining chips are all Apple’s
There’s plenty standing in its way, of course, but Apple has serious bargaining power with networks too. You don’t have to look far to see the effect of the iPhone on a network: Apple shifted a million 4S handsets within 24 hours, even despite a lukewarm reception from tech journalists. It’s a guaranteed moneymaker, and one few networks will be keen to lose.
That amount of leverage is huge, especially with a more landmark release such as the iPhone 5 on the table. If Apple waltzed into an operator’s boardroom and asked it to start selling airtime as part of the deal to sell the iPhone 5, would any of the major networks have the cojones to turn it down, and lose out on the bucketfuls of cash Apple’s new handset inevitably brings? It’s a tough call.
Maybe I’ve been reading too much into Apple’s moves over the past few years, but the prospect is tempting, and the opportunity, technology and motivation are all there.
Fanciful conspiracy theory, or the smartest move Apple could make? I know which I think is true, now over to you…
