

Should Apple buy a phone company? - Swannie
http://thenextweb.com/apple/2011/05/22/what-should-apple-buy-with-their-billions-their-own-carrier/

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umtrey
I can't find the article that originally referenced this... but the idea that
Apple would buy a phone company was made obsolete with the AT&T service issues
that were present in the United States. By commercially separating the Network
from the Phone - a new concept for the carrier-lock in situation in the states
- it removed a large segment of risk from the user experience. How many times
have you heard "the iPhone is great, but AT&T has terrible service" or
something else along those lines? It's a common argument.

People don't understand the difficulties of having lots of data on a large-
scale network across thousands of miles of cities, countrysides, and elevation
differences. They do understand if a computer or phone is slow, though. This
way, there are problems, but it's not because of Apple and their immaculate
product. Why tarnish your brand with something people won't understand?

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cubicle67
I think the iPod Touch is a sleeper product here. First gen was pretty much
just an iPod. Apple added a speaker, then a mic and now front/rear cameras and
facetime. The current $200, own outright, no contract iPod is already a
feature packed video phone (y'know, from the future) with one catch: it
requires wireless connectivity, something that's only going to become more
ubiquitous.

All Apple needs to do is switch off video on facetime, find a way to add voip
style phone numbers (like Skype et al) and then sell it as $200 phone, no plan
required.

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pagekalisedown
yup, I'm already doing exactly that. I use my iPod Touch (4th gen) as a phone
with a voip app and a voip subscription.

I'm always near wifi except when I'm in my car, and I have a pay-as-you-go
cell for those times.

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younata
If you're in your car (which implies you're driving, since it's YOUR car), you
shouldn't be using a phone.

~~~
cubicle67
not sure about the rules where you or pagekalisedown are, but in Western
Australia (rules vary state by state) it's legal to phone whilst driving
provided you're using a hands free kit

~~~
younata
I wasn't going for the legality of the issue, I was going for it's overall
more dangerous to drive while using the phone.

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pavlov
By the same logic, Microsoft should have bought AOL in 1998. There were
millions of people using AOL's network on Windows machines -- obvious synergy,
right?

AOL was a previous-generation network infrastructure company. Current mobile
phone operators are in a similar position. Any IT company should stay away
from making long-term bets on them: just play nice to get what you need from
the operators now, and let these dinosaurs go extinct when the market
eventually changes.

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hollerith
Bad analogy. AOL didn't own anything essential like the spectrum owned by the
mobile operators. I don't see WiFi as being a replacement for this spectrum
and note that WiMax relies on it.

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pavlov
The spectrum is immensely valuable, but it's fundamentally owned and
controlled by governments who have the power to decrease its value by imposing
more regulation on current operators and/or opening up new spectrum bands to
new competitors.

Current operators appear to me as not unlike the railroad monopolies of the
late 19th century. Immensely powerful and seemingly irreplaceable, but on the
brink of being disrupted to irrelevance.

~~~
hollerith
All the US auctions I know of, Verizon and ATT have bought most of the
spectrum -- probably because few can afford to outbid them.

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btucker
This article is light on factual research and chock full of daydreaming. Could
apple buy up another piece of the mobile communication puzzle? Sure. But I'm
certainly not holding my breath for this to happen. Apple is a product
company, not a service one. And I see no factual indication in the article
they're eager to change this by running around installing antennas in
Starbucks. Google on the other hand...

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FrojoS
Seriously? A company that takes pride in only having a handful of different
products, buying huge amounts of infrastructure? Also, how likely is it, that
this infrastructure is worth a dime in decade? Quite, likely I guess, but it
would still be risky bet.

On top, as Swannie has pointed out, Apple has an international market.

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stcredzero
_Also, how likely is it, that this infrastructure is worth a dime in decade?_

If they buy Clear, they're possibly going to face obsolescence. Many folks
think Wimax will lose out to technology like HSPDA+ and LTE in a few years.

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phil
Yes, they could charge $35/mo and still make the subsidyback... provided it
costs nothing to provide the phone service.

Back in the real world, why would anyone want to own a phone company? Even the
phone companies don't want to be phone companies anymore.

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Swannie
I think it is unlikely that Apple would buy Sprint. It is an extremely US
centric option, and whilst Apple's home is the USA, they are a global company.

Clearwire is a little more likely, but WiMax is just not matching the
performance:power ratio that LTE is offering.

As the article points out, the expense of a network build is mostly in the
land for towers (and the backhaul from tower site to network point-of-presence
- sometimes 100s of miles of fiber/microwave links). Buying Clearwire still
lands it with a lot of cruft that they don't need.

So the third way, unmentioned by the article, is that Apple goes into a joint
venture with a cell co. Joint ventures for infrastructure sharing (site,
tower, power on site, security, etc.) have long been established in the UK and
other EU countries (site sharing is used everywhere, but often only on a site
by site basis, with tower sharing not always happening).

Also in the UK market we've seen consolidation on the radio access network
front. Everything Everywhere is the network operator for two UK cell co's. At
the moment they still operate their own backend networks, but roaming between
the two is free.

If Apple were to go to Sprint/Clearwire with a proposal to create a
infrastructure or radio access network sharing operating company, this is a
win for all - reduced costs for the existing service provider (giving a
competative advantage) and access to Apple to build out their own iNetwork.

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anactofgod
Jobs drives towards elegant, uncluttered solutions. Much of his "vision" stems
from his ability to say "No." to crappy stuff
([http://blogs.forbes.com/carminegallo/2011/05/16/steve-
jobs-g...](http://blogs.forbes.com/carminegallo/2011/05/16/steve-jobs-get-rid-
of-the-crappy-stuff/)).

This being the case, if I were Jobs - and if I wanted to own and operate a
network - I'd want to build my own. But licenses for bandwidth are scare
resources, and building a mobile network from scratch takes a long time. The
most apparent way around this is to buy a carrier, as the author points out.

So, if Apple were to buy a carrier, yes, it'd be under very specific
conditions. Basically, the Apple M&A team would be using a due diligence
period to slice and dice the deal (and the carrier) in such a way to make sure
Apple skims the cream, and is able to slough off the rest to someone else, and
recuperate money off the divestiture, in the process. They would know how they
were going to get this done, before they sign any contract, or there wouldn't
be any deal.

The problem is, it's hard to see why another carrier would buy the legacy
mobile infrastructure from Apple, w/o all the shiny new bits. Also, it's not
clear that Apple would want to have to operate, manage, and upgrade a wireless
network. I can't see Apple wanting to own a utility company.

So, on a different track, I think the author discounts the "soft carrier"
approach too easily. In addition to saying "No." to crappy stuff, Jobs wants
to enter markets where Apple can change the game. So, how would one change the
game as a wireless carrier, not just as a mobile device manufacturer?

If I were Apple, I'd license spectrum from multiple carriers, depending on who
has the strongest coverage in a particular geographic area.

Apple is already using the chips/antennas in the iPhones that support both the
CMDA & GSM standards across all freqs. With licenses to operate AppleNet over
multiple carriers, Apple would be uniquely situated to create smartphones and
other mobile devices that could seamless operate over a multi-spectrum/multi-
protocol virtual wireless network. Ultimately, Apple could license spectrum
from multiple carriers in the same market, and have their iOS devices
automagically switch from one to another without the customer noticing the
handoffs. Plus, Apple can do the same in different markets, scaling AppleNet
globally. Customers would have _one_ AppleNet account, with "local" billing,
regardless of where in the world they are.

Now, _that_ would be a mobile market game changer. Again.

Of course, this multiple-licensee "soft carrier" approach to an AppleNet is
probably a pipe dream, as well. The roadblock to innovation in the wireless
industry, as always, are the wireless carriers. While stupid and slow, the
carriers are cunning operators. They would likely see this move by Apple as
being against their long-term interests, and resist Apple treating them as the
utilities that they really are. Apple may be able to overcome their concerns
by appealing to their short-term profit interests (a weakness of any publicly
traded company), just like they did with AT&T and the original iPhone. But
this time, if Apple were to make it happen, the short-term bait wouldn't be a
shiney iPhone. It'd be good, old-fashioned, cold, hard CA$H monies.

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lysol
Not gonna happen. Service companies are the whipping boy of every muttered
complaint under a user's breath. Not to mention the antitrust issues that
would inevitably come up.

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jimbobimbo
"We cannot allow your website on our AppleNet, because it doesn't follow our
AppleNet rules". _insert Yao Ming laughing rage face here_

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neworbit
Bizarre thinking to say "Apple would charge $35/month for unlimited usage".
When has Apple ever gone the route of price competition? They'd charge
$99/month or more and people would gladly pay it.

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hugh3
Incidentally, did folks know that Virgin Mobile is now offering prepaid
unlimited data + text + 300 voice minutes for $25 a month on a prepaid plan?
It's an insanely good deal.

Anyway, the days of $99 a month phone plans are presumably coming to an end.

~~~
stanmancan
Not in Canada. I pay about $80/m for 350 minutes, free evenings and weekends,
1GB of data, and "My 5 Nationwide". We need some more competition up here.

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amorphid
I don't see Apple buying a phone company. Maybe they will buy a competitor.
Amazon is "only" worth $90 billion, which means Apple could pay out of pocket
with cash very soon!

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_pius
No, but Google should.

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lotusleaf1987
No, a phone company doesn't scale. A national phone company doesn't help Apple
globally.

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aneth
Can anyone imagine Apple operating, supporting, maintaining, and upgrading a
national or global commodity telecommunications grid? Strikes me a small
distraction from Jobs' vision - create great products.

The idea is completely contrary to what Apple is good at and what they want to
do.

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jfb
No.

