Non-AT&T iPhone not likely until a 4G roll-out.

by WyldKard on April 27, 2009

A lot of people dislike AT&T. Granted, that number pales in comparison to the number of people who like AT&T, even if that relationship is entirely due to the iPhone’s embrace. It’s not as though most iPhone users love AT&T’s network, though, as AT&T has oft-been criticized for poor coverage areas and higher prices than competing carriers. In other words, AT&T’s growth is because of the iPhone, not because the iPhone is a bonus on top of some superior service. So it’s no surprise to hear that many iPhone users would gladly move to a different carrier if the iPhone were unlocked. But unlocking isn’t the only obstacle, because the iPhone’s hardware is built around GSM networks, not CDMA technology used by carriers like Verizon and Sprint. Even T-Mobile, which runs on GSM and can support EDGE, isn’t hardware compatible with the iPhone’s 3G implementation, meaning that unlocked 3G iPhones running on T-Mobile don’t get to run at the 3G speeds they’re otherwise capable of. And that’s sad, because it means consumers have little choice if they want to make the most of their cutting edge phones.

The iPhone’s exclusivity with AT&T is likely to continue for at least another year, whereupon some analysts believe that Apple may consider supporting other carriers. But again, this is no mere simple task, because Apple isn’t likely to suddenly spawn a CDMA iPhone even if AT&T were to screw up badly enough to lose Apple’s favor. Even Verizon agrees that Apple support of their services isn’t probable until 4G becomes widespread, because Verizon’s 3G offering is rooted in CDMA and EVDO, whereas their 4G standard will be LTE. Apple’s philosophy on the matter thus far has been simple: support the international cell-phone standard by going with GSM. It’s a one-phone-for-the-world philosophy, and one that works well for a company that tries to minimize product load-out options for the ease of the consumer. That’s not to say that Apple couldn’t further simplify load-out options for their various products, but to be fair, most variations in a given Apple product line are subtle, like for screen sizes or hard drive capacity. In a product aimed at simplicity, like the iPhone, further variance can be confusion-inspiring, even if the source of that confusion is a simple matter of what type of carrier the phone can run on. In other words, offering two seemingly identical products, each tied to a particular carrier, could undoubtedly cause backlash from consumers at the end of their cellular contracts (e.g. “If I bought an iPhone, why can’t I use it at the other carrier who also sells iPhones!?).

These rumours going around about Apple in talks with Verizon – they’re probably just rumours, much like talk about an upcoming Apple netbook or tablet. Realistically, if Apple is in talks with Verizon, they’re just as likely to be in talks with Sprint, and even more likely to be in talks with T-Mobile, which is the only other U.S. carrier to offer GSM. If Apple’s intent is to get people who hate AT&T to finally jump on the iPhone bandwagon, why not go with the one carrier who is already using GSM, and offers much better pricing than Verizon to boot? Heck, Apple would probably still make money by bringing back the 2G iPhone and selling it for use on T-Mobile: we already are.

Simply put, we’d have a far more credible rumour if it was said that Apple is in talks with T-Mobile. The only value-add Verizon has at this point is a more mature 3G network, but it’s not one Apple can easily adapt the iPhone to. Or, at least, not as easy as they could adapt the iPhone to T-Mobile’s 3G network. So where does this leave Verizon? Back to Verizon’s own statement about Apple’s interest likely related to 4G, and that means these purported talks, preliminary at best, are aimed at a public offering once LTE goes live. By then (2011?), Apple should be in a position to play all LTE providers against one another in oder to secure a sweet subscription-sharing deal. Whereas AT&T can now claim to be the only GSM carrier with a mature 3G network (T-Mobile’s is still not national), the LTE land-scape will be a different picture. As of right now, Verizon’s LTE plans appear ahead of AT&T’s schedule, but since a 4G-enabled iPhone isn’t in production yet, Apple has a number of options when the time comes:

One, Apple could stick with AT&T, offering an iPhone that works on EDGE, HSDPA, and LTE (i.e. adding LTE onto the current iPhone framework).

Two, if Verizon offered a good enough incentive to Apple and proved that their LTE network was capable of nation-wide use, Apple could offer the same phone to Verizon customers, with the only downside being that LTE dead-spots would mean no backup EDGE/3G service. The same thing applies for T-Mobile (but with backup EDGE and maybe 3G), and with Sprint (in the same situation as with Verizon).

The unlikely third option is if Apple decided to ditch AT&T for future iPhone revisions, in which case, they could conceive of a CDMA-based 4G iPhone for use on Verizon and maybe Sprint. The downside with this is that Apple would still need a separate iPhone hardware package for international customers, since everyone outside of the United States is still on GSM. (Think of GSM like the metric system of cell-technologies.) In other words, for simplicity of production (and customer adoption), it doesn’t make sense for Apple to duplicate the existing iPhone and simply swap out the GSM parts for CDMA parts. It’s far more likely, rather, that any talks Apple is in with non-AT&T carriers is to figure out where those carriers will be with their 4G network initiative by the time Apple’s iPhone exclusivity contract ends. If Apple doesn’t foresee a solid 4G roll-out by that time, Apple will very likely renew their contract with AT&T for a little while longer. Only when 4G looks like it will be widespread enough for significant use, will Apple re-evaluate their exclusivity agreements. Besides, by that time, Apple will be in a much better position to weigh exactly how big a threat the competition is, as the Palm Pre and Android should have been widely launched.

By that time, with the Pre’s exclusivity with Sprint ending, and Android moving across the carrier lines as well, it will be a natural move for Apple to follow, but with a product that, unlike Android phones, will have built a unified user-base familiar with exactly one hardware package, not multiple variants. If anything, that solidarity is what defines the iPhone: one phone to rule them all.

Update:Dilger’s take on the matter, over at Roughly Drafted, mirrors some of our own opinions. Choice quote mash-up:

What good is it to develop a secondary, parallel development of the iPhone to gain a standing in front of 80 million potential new customers when you lose your existing partner currently promoting the iPhone to 80 million existing customers as well as sucking the life from [the competition]? … It would be ridiculous for Apple to spend a year developing an EVDO mobile stack so that it could offer potential AT&T switchers a lazier alternative for another year before everyone began wanting a mobile device faster than EVDO or today’s UMTS can deliver.

If Apple maintains exclusivity with AT&T, non-AT&T carriers continue to lose business, effectively centralizing the iPhone’s network. With no carrier competition, all iPhone subscriptions funnel into the same resource pool, which will arguably be used to better AT&T’s network. This develops a baseline iPhone experience that defines what it means to own an iPhone.

Losing carrier exclusivity means that two different iPhone owners would have drastically different experiences because of the networks they’re on. Not to mention, the two networks will be poorer individually than if they were one. So the “one phone to rule them all” idea really carries over to the network as well. One iPhone. One network. One glorious user experience. At least in theory.

Similar Posts:

Tagged as: , , ,

Leave a Comment