ON WHY AN APPLE CINGULAR iPHONE IS OK

GOOD ENOUGH   

The biggest complaints from tech observers following Apple's iPhone (as opposed to Cisco's iPhone) announcement yesterday have had to do with it's choice of Cingular as the exclusive network partner. 

As Fred Wilson put it:

"I also think the exclusive deal with Cingular is nuts. Why force people who want an iPhone to switch carriers?
Apple is an obnoxious company. They make wonderful products that blow me away. But I really dislike their approach to business.
I won't use the iPhone unless you can get it unlocked and run it on any GSM network."

And as I mentioned in an earlier post today, Tom Evslin outlined his reasons why Apple failed to "reinvent Telecom".

And the exclusive with Cingular may not be just for a few months, as is often the case with sexy new phones.  As the Bits blog from the New York Times reports:

"Cingular’s exclusive rights to sell Apple’s new iPhone is a “multi-year agreement in the U.S.,” said Glenn Lurie, Cingular’s president of national distribution, in a press conference today at CES. The agreement also includes future models which will be introduced “soon.”

And if you’re thinking of buying the iPhone through Cingular and then using it on another GSM network, you might want to reconsider. Both Apple and Cingular will sell the phone as a “locked” device. Even though it uses the GSM standard, it won’t work on other GSM systems."

While the techno-revolutionary in me would have loved to see Apple go up against the oligopolistic hegemony of the cell phone carriers here and abroad, the shareholder AND the geeky phone user in me is HAPPY that Apple decided to go with Cingular.

Although I don't know this for sure, but the multi-year exclusive likely had to do with the unique "visual voice-mail" feature that Steve Jobs described in detail at the MacWorld keynote. 

That kind of capability requires a fair bit of support from the wireless carrier, and is likely not an easy thing to do across multiple carriers without significant investment in resources.  Cingular likely extracted it's pound of flesh in terms of exclusivity in exchange for working closely with Apple on this and presumably other cool features.

For Steve it was probably the "cost of doing business", as he's had to do with the music companies on the original iPod/iTunes and the movie companies with the video offerings on iTunes (remember the 5 computer limit on your iTunes library-sharing?).

Don't get me wrong.  I don't have the warm fuzzies for Cingular/AT&T (soon to be re-branded as AT&T), like I have for Apple. 

But I don't have the warm fuzzies for Verizon Wireless, Sprint or T-Mobile either, the only other options I have for wireless voice and data services in the U.S. thanks to the increasingly archaic approaches to regulating spectrum.

Having used other cell phone carriers like Vodaphone in the UK and Airtel in India (see recent post), I don't have the warm fuzzies for most other wireless carriers either.

They're all generally about charging the maximum they can for any and all features from consumers, nickel and diming for everything, while trying to keep as much control of their phone real estate and features as possible. 

And they're all as much fun to deal with in terms of customer service and/or technical support as the post office or a trip to the dentist.

So I've become practical about my approach to wireless carriers, while stowing away the idealism and the wish-list of what I'd like them to become. 

They'll never be that until technology forces truly open up their control over wireless services.

And that too will happen over time.

In the meantime, it's about making a pragmatic decision in the near-term to get the maximum features for not too obnoxious a price.

While I have a cell phone today from each of the U.S. wireless carriers for a variety of reasons, my primary cellphone for the last couple of years in the U.S. has been a Verizon Blackberry 7130.

The reasons were simple.

Verizon Wireless over the last couple of years has had the following:

1. The best voice coverage network for my purposes around the U.S.
2. The fastest data network with it's EV-DO offering, both with cell phones and PC data cards.

The primary reason I've had a T-Mobile and a Cingular phone has had to do with Verizon's Achilles heel, and that is lack of global coverage due to a non-GSM network.

Only Cingular and T-Mobile offer GSM voice coverage overseas, taking advantage of the tri-band and quad-band phones that have been popping up over the last couple of years.

Sprint is the closest to Verizon in terms of having a fast EV-DO network.

Cingular has had a much slower data network with it's GPRS technology, while T-Mobile has been the slowest on the data front. It's made up for it in terms of generally less expensive pricing for it's voice and data plans.

But Cingular has been in the process of catching up to Verizon and Sprint on the data front with it's new HSPDA data network, which offers competitive high wireless broadband speeds for similar prices.  It's just not as extensive as the ones from those two companies but will catch up in 2007.

So in the fall last year, I had come to the conclusion that Cingular would be my primary wireless network in 2007.  It would then offer the three things that I deemed the most important:

1. Very good voice coverage here and abroad.
2. High speed data coverage.
3. Global voice and data coverage due to it's GSM support.

The only question in my mind was which phone would be my primary device.

With the iPhone announcement yesterday, and it's unique feature set, my primary personal phone will likely be an Apple Cingular device.

I'll still keep the Blackberry on Verizon as my business phone.  I don't think Blackberry's push e-mail capability will be beaten by anybody at least in 2007.

So I'm at relative peace with being locked in for a couple of years with Cingular while trying out the Apple iPhone.

My only problem will be when I'll want to upgrade to the newer iPhone a few months later, and still being locked into my two-year contract with Cingular. 

But that's a rant for a future post.

Comments

[Chavez]

Getting this iphone to sync with desktop and remote server would be just great. Despite gripes about isync for sometime, its now time for remote sync, wireless sync services. Personally getting it to use with a zyb.com account can be the most covenient way. I can migrate to other network so can my address book and yeah appointments :)

[Jason Wood]

Michael,

Nice perspective. Wireless churn exists for many reasons, but ultimately how many of us are so married to our carrier we wouldn't switch? I've been Verizon for years, but with number portability, I would swap to Cingular without hesitation if there was enough impetus.

The iPhone (or ApplePhone is Cisco has its way) MAY (emphasis on the MAY) be impetus enough.

Best, and Happy New Year!

Jason

[Alex Tolley]

Mike,

I personally don't think there is much difference between cell carriers in the US. As a Verizon subscriber happily out of the 2 year contract term, I wouldn't hesitate to switch to Cingular to use the iPhone, although I also lament the lock-in. However, one impetus for me is the WiFi connection and the possibility of using a very low cost VOIP service in the Bay Area where free WiFi is slowly rolling out.

Imagine this for a future strategy. Apple indeed sells lots of iPhones, then allows each phone to become part of the WiFi network thus making the phones independent of the carriers. Cheaper vendors like Belkin will also assist at the low end, finally forcing real, low cost competition to the carriers.

[Bill Burnham]

From what I hear the exclusive arrangement was the result of the very hard economic bargain that Apple drove in terms of A) the handset subsidy that Cingular will pay to Apple B) Apple's desire for complete control of platform even after it's on the network C) Apples's desire to get a significant share of the back-end economics of app/content sales to the phone. The only way Cingular could justify these kinds of concessions was to get a multi-year exclusive. From what I understand Apple's deal is basically unique in the handset world and the carriers are all praying that Cingular hasn't opened Pandora's box.