We all know that for the next few years Apple’s iPhone is tied to the AT&T network, or whatever carrier has won the iPhone contract in your country by sharing the biggest slice of it’s revenues.
But what’ll happen after these contracts lapse? After the iPhone is an established and lusted for device with tens of millions of users, thriving developer community and amazing data service utilization rates?
And all this, still in a closed system that isn’t actually locked into any specific carrier network, but registered, serviced, updated and often billed via the iTunes service.
What kind of leverage this set-up will give Apple in a few years time? And what Apple can do with it? Go to the old mobile industry ways of selling the device to every mobile operator around? I don’t think so. Renew the exclusive contracts or award them to another carrier and extract even bigger slice of iPhone generated revenue? Possible.
But I believe that Apple may have even grander ambitions for it’s iPhone franchise.
How about the iPhone that operates in a constant roaming mode, with no real home network, but able to connect to any wireless network around. How about the Apple/iTunes becoming the mobile virtual network operator (MVNO) and buying up or reserving minutes on all these networks and offering them directly to the iPhone owners? With the possibility for the users to manually or automatically select the best service level and price at any given time and place?
Well, a new patent application called “Dynamic Carrier selection” filed on Oct.10 2006, shows that Apple has been thinking along these lines even before the introduction of iPhone.
The device described in the application will have it’s own iTunes MVNO carrier ID to identify and register itself to any available network. Apple will negotiate with network carriers the permission for initial registration and data exchange between the iPhone and Apple MVNO server.
When iPhone first connects to wireless network, it sends iTunes MVNO server it’s ID and location, and get’s back the information with the available networks, services and rates in the area. Then a user can manually select the best network for him, or the network operator can be dynamically selected by software according to specified criteria.
Once the permanent connection is established, the available network service and pricing data can be continuously updated, and the device can be set to change the network operator as better offers become available. E.g. the AT&T may have better daytime rates, while T-Mobile is offering better night time and weekend minutes, or Vodafone may have the excellent voice call prices while 3 Network has even better data rates. Your iPhone knows this and switches the network operator accordingly.
All the bills from network operators go to the Apple/iTunes MVNO and you are billed via iTunes as well.
But that’s not the end of it. Apple is also thinking of allowing networks to dynamically submit bids with their various service offerings and prices in different areas.
Say there’s a residential area in suburbs, where most of it’s inhabitant’s leave for work during daytime. The network capacity the operator has there is extremely underutilized during the daytime. So the operator can drop the voice and data rates dramatically for these hours in this particular area, in order of enticing every iPhone user around to get on board. Everybody wins, iPhone users get much better rates, while the network operator gets paid for otherwise idle capacity.
Will this Apple MVNO service come into being?
I don’t know. These ideas where developed together with the iPhone. They might reflect their thinking in 2005-2006 timeframe. And a lot has changed since then, including exclusive AT&T and other carrier contracts. So this patent application might reflect an abandoned opportunity.
But there’s also another possibility as well. Apple had to have AT&T contract to get the iPhone from the ground and establish a firm beached in wireless marketplace.
But once Apple has built a loyal user base in tens of millions, no mobile network operator would be able to dismiss Apple’s offer easily. And if Apple comes to them and says, that “From now on we are going MVNO route, we have all these millions of users consuming high margin data services like crazy, and, for the right price, we can give you access to all of them“, every network operator would think twice before rejecting such offer.
And switching the iPhone user to another network is as easy as a simple iPhone firmware update via iTunes.
Of course there will be tons of work to do and loads of technical and legal questions to settle. But Apple already has a pretty strong and accelerating momentum building for it’s iPhone franchise. And if anybody can do it, it’s them.
After all Apple already has changed the rules of the game in one backwards Byzantine industry controlled by a handful of players. Music.
And Apple also has changed some of the entrenched ways of the wireless industry “Orifices” with just their first product. So it’s very likely that the growing iPhone franchise will bring about even more changes.
Interesting times ahead.
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