By Richard Koman / Top Tech News. Updated September 11, 2007.
From the day the iPhone was released, consumers have had one persistent complaint -- the lock-in to AT&T and its poky data network. Steve Jobs is no fan of wireless carriers. In fact, he has called them "orifices" in the past, and at last week's announcement of the iPhone price cut, he didn't even mention his partner, AT&T. Is it possible, then, that Jobs would act to cut the stranglehold wireless carriers have on mobile communications?
Reports emerged Monday that Jobs and Apple are indeed considering participating in the government's auction of 700-MHz spectrum -- the long-distance spectrum being abandoned by television broadcasters. Google already has announced its intention to bid. While the reports published Monday say Apple is leaning against the idea, Jobs apparently has been giving the possibility serious consideration.
"The major reason appears to be the iPhone," independent industry analyst Greg Sterling said in a telephone interview. "There's a lot of fervor around the idea of unlocking the iPhone from AT&T. The ability to offer wireless access without a carrier would be a benefit to Apple."
We Don't Need No Stinkin' 3G
In an iPhone-launch interview with the Wall Street Journal's Walt Mossberg, Jobs dismissed the notion that he should have made the iPhone able to connect to 3G networks. "Wi-Fi delivers data several times faster than 3G networks," he said. Asked when there would be a 3G iPhone, he said, "Again, Wi-Fi is far faster than the 3G networks."
Last week he unveiled the iPod touch, which, like the iPhone, is Wi-Fi enabled but doesn't run on cellular networks. Theoretically, both the iPhone and the iPod touch could run on the 700-MHz spectrum. "The rationales are valid enough that they are probably looking at it," Sterling said. "It gives them a measure of degree over their own fate."
Becoming a network operator would be a huge sea change for Apple, though. While many have speculated about Apple moving to an Internet-computing approach, Apple really operates only one Web service: iTunes. "Apple can see the road ahead -- wide connectivity -- and how they would benefit," Sterling said. "They would be foolish not to chew on the idea, but it's unlikely they'll actually do it."
The Silicon Valley company that lives and breathes cloud computing, after all, is Google. With its focus on search, online advertising, and online applications, Google would be in a much better position than Apple to recoup any losses it might suffer as a result of owning and operating wireless spectrum.
A Shock to Traditional Carriers
Indeed, any company thinking about stepping up to the spectrum auction would have to have a very strong sense that it knew what it was doing. "This is a business that's a big headache, "with low margins and high operational burdens," Sterling said.
In any case, it's not clear whether Apple owning the spectrum would be an immediate benefit to consumers at large. "It's not desirable from a public standpoint," Sterling said. The most desirable result for consumers, he said, would be for the spectrum to blanket the country with open access.
Of course, the winner of the auction will have to abide by FCC rules that require a certain amount of openness. "Interestingly, Apple and Google are aligned in this," Sterling said. "What would be interesting is to see if they cooperated in some way."
Ultimately, Jobs' tire-kicking around the auction might reflect his and other technology leaders' sense that the carriers are impeding innovation. "There's a lot of frustration that things aren't moving fast enough," he said, noting that municipal Wi-Fi seems to have stalled.
The new spectrum is so powerful -- the FCC calls is "beachfront property" -- that Silicon Valley control of it could mean fundamental, disruptive change for mobile communication, Sterling said. "Wireless providers right now have a stranglehold on the market; they are the gatekeepers. They are inhibiting growth of wireless data and other services." If another company comes in to subsidize the services with advertising, Sterling concluded, that would be "the rude shock of their lives."