How Apple will become a mobile carrier

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How Apple will become a mobile carrier

What's next for Apple? Apple will provide wireless service directly to its iPad and iPhone customers. First, Apple will sell data packages bundled with iPads. Then it will sell data and international roaming plans to iPhone customers through the iTunes Store. And in time — sooner than many think — Apple will strike wholesale deals with several mobile operators so that Apple can provide wireless service directly to its customers, as Apple Mobile.

Will domestic and global mobile operators like AT&T, Vodafone, Telefónica and others "play ball" with Apple? Many in the U.S. were surprised six years ago when AT&T capitulated to Apple's terms to become the first carrier to offer the iPhone six years ago. Conventional wisdom is that the struggling operators compromises, not a leading operator like AT&T. But Apple makes everyone "think different."

And in hindsight, the first iPhone deal was a brilliant strategy that has continued to pay huge dividends to AT&T. In the last quarter just reported, four out of five smartphones AT&T sold were iPhones.

Apple changed the formula of the relationship between operator and handset vendor, with Apple having more bargaining power than the operator for the first time in mobile history. And that's the point.

Apple will make an offer carriers can't refuse

Today, mobile operators would have a hard time saying "no" to the world's largest and fastest growing company, which builds the devices everyone wants. Apple tends to have its way with operators. Any reluctance on the carrier's part to offer Apple a sweetheart wholesale deal would be outweighed by the huge business opportunity presented. It's a classic case of "The Prisoner's Dilemma." The carrier's biggest fear is that if it says "no", the business and growth would go to a competing carrier and it would be kicked the curb.

It's no secret that Apple has been thinking about this strategy for some time. Apple filed a patent for "Dynamic Carrier Selection" on October 10, 2006, just a few months before Apple announced the first iPhone. The diagram in the patent application portrayed Apple as the wireless service provider connecting to multiple carriers. This would allow Apple to make wholesale cellul...