Why Apple should go into the mobile network business

One of the things that has certainly helped Apple be successful is making both the hardware and the software that runs its devices. Because of this, issues of compatibility have always been less problematic on Macs than they have on PCs.

But when 2007 rolled around, and Apple introduced the iPhone, Apple no longer controlled the users' end-to-and experience. Using this device depended on not just hardware and software, but also a mobile phone network. Sure, using a Mac on the Internet has also depended on ISPs (Internet service providers), but Internet access contracts are simpler, and easier to understand, and generally don't have coverage issues or data caps.

With the iPhone, and later with the cellular iPad, users have to worry about whether or not they choose the correct contract, how many minutes or how much data they have per month, and whether they live and work in an area covered by their provider.

You can buy an iPhone and a contract with a specific mobile provider at the same time. But imagine a different situation, where Apple sells you a new iPhone or iPad and also sells you, if you choose, a contract to connect that device to any network, perhaps, even, and any country. And the provider you sign up with is Apple. For a monthly fee, Apple could provide you with a full range of services: calls, texts, data, cloud storage, music streaming, access to videos, and much more, and give you unlimited data for any of its own services. You would no longer have to worry about data caps for, say, streaming music or movies, And Apple could probably do this much more cheaply than current mobile phone operators.

One plan, every carrier

To do this, Apple would become an MVNO, or a mobile virtual network operator. There are dozens of these in the United States, and most countries also have similar operators. An MVNO simply buys minutes and data from a larger mobile phone operator, and then sells the service under their own brand.

But Apple could do this differently. Given the size of the company, and the number of users who would potentially purchase such a plan, Apple could buy minutes and data from all of the major mobile phone providers, ensuring that you get coverage everywhere.

There is one hitch to this in the United States: cell phones use two standards, CDMA and GSM. Most of the rest of the world uses GSM only, but in the United States, Apple has to sell two different phone models because of these competing standards. This would mean that with the current situation, coverage might still be fragmented, but outside the United States, where everyone uses GSM, coverage would be much better. For example, where I live, in a small village in the UK, only one of the 4 large mobile phone providers offers good coverage. However, the same iPhones have been able to use both CDMA and GSM, and Apple certainly make an iPhone that handles both types of network.

The advantage to this would be clear. Given Apple's size, the company could negotiate rates that would be highly competitive with current contracts. Apple could sell a rolling plan at a monthly fee that would allow users to get a new iPhone every year or two, as soon as the new model is released, and continue with the same plan. This could ensure more sales of new devices, and he could make it simpler for users to always have the latest model.

The biggest hurdle would be the mobile phone companies. They might be reticent to agree to such a change in their business model, but, if they were to save money on customer acquisition, it could, in the long term, be more profitable for them as well.

I was working on this article, a rumor surfaced that Google is planning to become an MVNO. Reportedly, Google will provide service through two networks, Sprint and T-Mobile, but since Google does not make smartphones--yet--they would not be providing a full end-to-end solution, which is something that Apple can do.

In the long term, this could be the best way for Apple to extend its user base and enhance customer loyalty. If Apple allowed users unlimited data for any of its services--iCloud, iTunes Match, the App Store, the iTunes Store, and whatever future music streaming service the company will be releasing--it would make it much simpler for users to take advantage of these services on their phones. It would be good for Apple, and good for Apple's users.


Kirk McElhearn

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